10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2013

VECTOR GROUP LTD.

(Exact name of registrant as specified in its charter)

Delaware	1-5759	65-0949535
(State or other jurisdiction of incorporation	Commission File Number	(I.R.S. Employer Identification No.)
incorporation or organization)

4400 Biscayne Boulevard

Miami, Florida 33137

305/579-8000

(Address, including zip code and telephone number, including area code,

of the principal executive offices)

100 S.E. Second Street

Miami, Florida 33131

(Former address, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

xYesoNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

xYesoNo

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

xLarge accelerated filer	oAccelerated filer	oNon-accelerated filer	oSmaller reporting company
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

oYes xNo

At July 31, 2013, Vector Group Ltd. had 89,983,587 shares of common stock outstanding.

VECTOR GROUP LTD.

FORM 10-Q

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	2
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and June 30, 2012	3
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and June 30, 2012	4
Condensed Consolidated Statement of Stockholders' Deficiency for the six months ended June 30, 2013	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3. Quantitative and Qualitative Disclosures About Market Risk	58
Item 4. Controls and Procedures	58
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	58
Item 1A. Risk Factors	58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6. Exhibits	60
SIGNATURE	61

1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	June 30, 2013			December 31, 2012
ASSETS:
Current assets:
Cash and cash equivalents	$	281,713		$	405,855
Investment securities available for sale	134,141			69,984
Accounts receivable - trade, net	12,495			11,247
Inventories	96,761			100,392
Deferred income taxes	32,017			36,609
Income taxes receivable, net	16,631			6,779
Restricted assets	1,241			2,469
Other current assets	5,220			5,721
Total current assets	580,219			639,056
Property, plant and equipment, net	58,067			57,153
Investment in consolidated real estate businesses, net	23,200			13,295
Long-term investments accounted for at cost	21,292			16,367
Long-term investments accounted for under the equity method	6,671			6,432
Investments in non-consolidated real estate businesses	142,878			119,219
Restricted assets	12,288			9,792
Deferred income taxes	54,140			49,142
Intangible asset	107,511			107,511
Prepaid pension costs	13,787			12,870
Other assets	49,490			55,894
Total assets	$	1,069,543		$	1,086,731
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	33,906		$	36,778
Current payments due under the Master Settlement Agreement	59,685			32,970
Current portion of employee benefits	2,824			2,824
Accounts payable	5,920			6,099
Accrued promotional expenses	17,618			18,730
Income taxes payable	6,423			6,269
Accrued excise and payroll taxes payable, net	1,208			20,419
Litigation accruals	281			1,470
Deferred income taxes	32,030			27,299
Accrued interest	22,398			25,410
Other current liabilities	13,080			16,891
Total current liabilities	195,373			195,159
Notes payable, long-term debt and other obligations, less current portion	638,352			586,946
Fair value of derivatives embedded within convertible debt	166,629			172,128
Non-current employee benefits	46,377			45,860
Deferred income taxes	112,444			109,532
Payments due under the Master Settlement Agreement	35,630			52,639
Litigation accruals	1,738			1,862
Other liabilities	2,502			1,857
Total liabilities	1,199,045			1,165,983
Commitments and contingencies
Stockholders' deficiency:
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized	—			—
Common stock, par value $0.10 per share, 150,000,000 shares authorized, 93,708,273 and 93,658,273 shares issued and 89,948,411 and 89,898,411 shares outstanding	8,994			8,989
Additional paid-in capital	—			—
Accumulated deficit	(123,554		)	(65,116		)
Accumulated other comprehensive loss	(3,232		)	(10,268		)
Less: 3,759,862 shares of common stock in treasury, at cost	(12,857		)	(12,857		)
Total Vector Group Ltd. stockholders' deficiency	(130,649		)	(79,252		)
Non-controlling interest	1,147			—
Total stockholders' deficiency	(129,502		)	(79,252		)
Total liabilities and stockholders' deficiency	$	1,069,543		$	1,086,731

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues*	$	249,120		$	276,594		$	489,522		$	534,200
Expenses:
Cost of goods sold*	180,430			211,752			353,386			411,933
Operating, selling, administrative and general expenses	24,450			23,914			48,800			47,893
Operating income	44,240			40,928			87,336			74,374
Other income (expenses):
Interest expense	(32,086		)	(26,509		)	(65,462		)	(52,761		)
Loss on extinguishment of debt	—			—			(21,458		)	—
Change in fair value of derivatives embedded within convertible debt	2,450			(6,003		)	5,499			(27,060		)
Acceleration of interest expense related to debt conversion	—			(7,888		)	—			(7,888		)
Equity income from non-consolidated real estate businesses	6,804			5,232			7,285			8,095
Equity income (loss) on long-term investments	846			(1,215		)	823			(1,329		)
(Loss) gain on sale of investment securities available for sale	(197		)	—			5,209			—
Other, net	1,471			583			2,280			515
Income (loss) before provision for income taxes	23,528			5,128			21,512			(6,054		)
Income tax expense (benefit)	10,017			1,233			9,682			(2,259		)
Net income (loss)	13,511			3,895			11,830			(3,795		)
Net income (loss) attributed to non-controlling interest	—			—			—			—
Net income (loss) attributed to Vector Group Ltd.	$	13,511		$	3,895		$	11,830		$	(3,795	)
Per basic common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$	0.15		$	0.05		$	0.13		$	(0.05	)
Per diluted common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$	0.15		$	0.05		$	0.13		$	(0.05	)
Cash distributions and dividends declared per share	$	0.40		$	0.38		$	0.80		$	0.76

* Revenues and Cost of goods sold include excise taxes of $112,596, $130,967, $221,507 and $252,892, respectively.

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss)	$	13,511		$	3,895		$	11,830		$	(3,795	)
Net unrealized gains (losses) on investment securities available for sale:
Change in net unrealized gains (losses)	2,866			(3,025		)	16,904			(14,269		)
Net unrealized losses (gains) reclassified into net income	197			—			(5,209		)	—
Net unrealized gains (losses) on investment securities available for sale	3,063			(3,025		)	11,695			(14,269		)
Net unrealized gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	(1,542		)	(2,505		)	(584		)	542
Net unrealized gains reclassified into net income	—			—			—			—
Net unrealized (losses) gains on long-term investments accounted for under the equity method	(1,542		)	(2,505		)	(584		)	542
Net change in forward contracts	16			17			31			32
Net change in pension-related amounts	351			871			702			1,741
Other comprehensive income (loss)	1,888			(4,642		)	11,844			(11,954		)
Income tax effect on:
Change in net unrealized gains (losses) on investment securities	(1,163		)	1,228			(6,863		)	5,793
Net unrealized losses (gains) reclassified into net income on investment securities	(80		)	—			2,115			—
Change in unrealized (losses) gains on long-term investments	626			1,017			237			(220		)
Net unrealized gains reclassified into net income on long-term investments	—			—			—			—
Forward contracts	(6		)	(7		)	(12		)	(13		)
Pension-related amounts	(143		)	(354		)	(285		)	(707		)
Income tax (provision) benefit on other comprehensive income (loss)	(766		)	1,884			(4,808		)	4,853
Other comprehensive income (loss), net of tax	1,122			(2,758		)	7,036			(7,101		)
Comprehensive income (loss)	14,633			1,137			18,866			(10,896		)
Less: Comprehensive income attributed to non-controlling interest	—			—			—			—
Comprehensive income (loss) attributed to Vector Group Ltd.	$	14,633		$	1,137		$	18,866		$	(10,896	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Vector Group Ltd. Deficiency
				Additional						Accumulated Other
	Common Stock			Paid-In			Accumulated			Comprehensive			Treasury			Non-controlling
	Shares	Amount		Capital			Deficit			(Loss) Income			Stock			Interest			Total
Balance, December 31, 2012	89,898,411	$	8,989	$	—		$	(65,116	)	$	(10,268	)	$	(12,857	)	$	—		$	(79,252	)
Net income	—	—		—			11,830			—			—			—			11,830
Change in net loss and prior service cost, net of income taxes	—	—		—			—			417			—			—			417
Forward contract adjustments, net of income taxes	—	—		—			—			19			—			—			19
Unrealized loss on long-term investment securities accounted for under the equity method, net of income taxes	—	—		—			—			(347		)	—			—			(347		)
Change in net unrealized gain on investment securities, net of income taxes	—	—		—			—			10,041			—			—			10,041
Net unrealized gains reclassified into net income, net of income taxes	—	—		—			—			(3,094		)	—			—			(3,094		)
Unrealized gain on investment securities, net of income taxes	—	—		—			—			—			—			—			6,947
Total other comprehensive income	—	—		—			—			—			—			—			7,036
Total comprehensive income	—	—		—			—			—			—			—			18,866
Distributions and dividends on common stock	—	—		(1,250		)	(70,268		)	—			—			—			(71,518		)
Restricted stock grant	50,000	5		(5		)	—			—			—			—			—
Stock-based compensation	—	—		1,255			—			—			—			—			1,255
Contributions to non-controlling interest	—	—		—			—			—			—			1,914			1,914
Distributions to non-controlling interest	—	—		—			—			—			—			(767		)	(767		)
Balance as of June 30, 2013	89,948,411	$	8,994	$	—		$	(123,554	)	$	(3,232	)	$	(12,857	)	$	1,147		$	(129,502	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Six Months Ended			Six Months Ended
	June 30, 2013			June 30, 2012
Net cash provided by operating activities	$	5,190		$	57,829
Cash flows from investing activities:
Sale of investment securities	43,115			—
Purchase of investment securities	(90,368		)	(1,148		)
Proceeds from sale or liquidation of long-term investments	75			72
Purchase of long-term investments	(5,000		)	(5,000		)
Investments in non-consolidated real estate businesses	(19,048		)	(9,667		)
Investments in consolidated real estate businesses	(7,657		)	—
Distributions from non-consolidated real estate businesses	—			6,221
Increase in cash surrender value of life insurance policies	(303		)	(620		)
Increase in restricted assets	(1,268		)	(53		)
Issuance of notes receivable	—			(234		)
Proceeds from sale of fixed assets	13			404
Capital expenditures	(5,995		)	(7,394		)
Repayments of notes receivable	8,433			—
Net cash used in investing activities	(78,003		)	(17,419		)
Cash flows from financing activities:
Proceeds from debt issuance	453,080			14,018
Deferred financing costs	(11,663		)	(315		)
Repayments of debt	(418,833		)	(13,493		)
Borrowings under revolver	474,493			525,350
Repayments on revolver	(476,888		)	(532,082		)
Dividends and distributions on common stock	(71,518		)	(66,112		)
Proceeds from exercise of employee stock options	—			45
Tax benefit of employee stock options exercised	—			4
Net cash used in financing activities	(51,329		)	(72,585		)
Net decrease in cash and cash equivalents	(124,142		)	(32,175		)
Cash and cash equivalents, beginning of period	405,855			240,923
Cash and cash equivalents, end of period	$	281,713		$	208,748

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation:

The condensed consolidated financial statements of Vector Group Ltd. (the “Company” or “Vector”) include the accounts of VGR Holding LLC (“VGR Holding”), Liggett Group LLC (“Liggett”), Vector Tobacco Inc. (“Vector Tobacco”), Liggett Vector Brands LLC (“Liggett Vector Brands”), New Valley LLC (“New Valley”) and other less significant subsidiaries. All significant intercompany balances and transactions have been eliminated.

Liggett and Vector Tobacco are engaged in the manufacture and sale of cigarettes in the United States. New Valley is engaged in the real estate business and is seeking to acquire additional operating companies and real estate properties.

The accompanying unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and, in management's opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission. The consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.

Certain reclassifications have been made to the 2012 financial information to conform to the 2013 presentation.

(b) Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statement of stockholders' equity to the extent of retained earnings and accumulated paid-in capital. Any amounts exceeding retained earnings are recorded as a reduction to additional paid-in capital. Any amounts then exceeding accumulated paid-in capital are recorded as an increase to accumulated deficit.

(c) Earnings Per Share (“EPS”):

Information concerning the Company's common stock has been adjusted to give retroactive effect to the 5% stock dividend paid to Company stockholders on September 28, 2012. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

Net income (loss) for purposes of determining basic and diluted EPS was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss) attributed to Vector Group Ltd.	$	13,511		$	3,895		$	11,830		$	(3,795	)
Income attributed to participating securities	(374		)	(79		)	(328		)	—
Net income (loss) available to common stockholders	$	13,137		$	3,816		$	11,502		$	(3,795	)

7

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Weighted-average shares for basic EPS	86,826,428	83,345,002	86,824,463	83,179,283
Plus incremental shares related to stock options and non-vested restricted stock	206,562	203,118	195,925	—
Weighted-average shares for basic and fully diluted EPS	87,032,990	83,548,120	87,020,388	83,179,283

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and six months ended June 30, 2013 and 2012 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Number of stock options	N/A		N/A		N/A		2,299,640
Weighted-average exercise price	N/A		N/A		N/A		$	13.09
Weighted-average shares of non-vested restricted stock	53,500		3,500		53,500		383,587
Weighted-average expense per share	16.36		$	17.12	$	16.36	$	10.86
Weighted-average number of shares issuable upon   conversion of debt	26,962,402		17,854,218		26,962,402		18,017,309
Weighted-average conversion price	$	15.98	$	14.09	$	15.98	$	14.10

(d) Fair Value of Derivatives Embedded within Convertible Debt:

The Company has estimated the fair market value of the embedded derivatives based principally on the results of a valuation model. The estimated fair value of the derivatives embedded within the convertible debt is based principally on the present value of future dividend payments expected to be received by the convertible debt holders over the term of the debt. The discount rate applied to the future cash flows is estimated based on a spread in the yield of the Company's debt when compared to risk-free securities with the same duration; thus, a readily determinable fair market value of the embedded derivatives is not available. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads for secured to unsecured debt, unsecured to subordinated debt and subordinated debt to preferred stock to determine the fair value of the derivatives embedded within the convertible debt. The valuation also considers other items, including current and future dividends and the volatility of the Company's stock price.  The range of estimated fair market values of the Company's embedded derivatives was between $163,949 and $169,391.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $166,629 as of June 30, 2013. At December 31, 2012, the range of estimated fair market values of the Company's embedded derivatives was between $169,424 and $174,909.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $172,128 as of December 31, 2012.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 5.)

8

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(e) Other Income, Net:

Other income, net consists of:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013		2012
(Loss) gain on warrants	$	(28	)	$	(210	)	$	37	$	(853	)
Interest income	826			499			1,476		1,041
Accretion of interest income of debt discount on notes receivable	588			32			623		63
Gain on long-term investment	142			135			142		135
Other (loss) income	(57		)	127			2		129
Other income, net	$	1,471		$	583		$	2,280	$	515

(f) New Accounting Pronouncements:

In July 2012, the FASB issued amendments to the indefinite-lived intangible asset impairment guidance which provides an option for companies to use a qualitative approach to test indefinite-lived intangible assets for impairment if certain conditions are met. The amendments are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012 (early adoption was permitted). The implementation of the amended accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. The implementation of the amended accounting guidance did not have a material impact on the Company's consolidated financial statements.

2. INVENTORIES

Inventories consist of:

	June 30, 2013			December 31, 2012
Leaf tobacco	$	48,425		$	59,130
Other raw materials	4,534			3,151
Work-in-process	396			210
Finished goods	68,916			64,396
Inventories at current cost	122,271			126,887
LIFO adjustments	(25,510		)	(26,495		)
	$	96,761		$	100,392

9

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The Company has a leaf inventory management program whereby, among other things, it is committed to purchase certain quantities of leaf tobacco. The purchase commitments are for quantities not in excess of anticipated requirements and are at prices, including carrying costs, established at the commitment date. At June 30, 2013, Liggett had tobacco purchase commitments of approximately $35,255.

All of the Company's inventories at June 30, 2013 and December 31, 2012 have been reported under the LIFO method.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at June 30, 2013 were as follows:

	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Equity securities	$	52,921	$	34,700	$	(930	)	$	86,691
Fixed income securities	47,638		350		(538		)	47,450
Total investment securities available for sale	$	100,559	$	35,050	$	(1,468	)	$	134,141

The table below summarizes the maturity dates of fixed income securities at June 30, 2013.

Fixed Interest by Maturity:	Cost		Fair Value
Under 1 Year	$	497	$	496
1 Year up to 5 Years	33,760		33,394
5 Year up to 10 Years	1,535		1,514
More than 10 Years	11,846		12,046
Total	$	47,638	$	47,450

4. LONG-TERM INVESTMENTS

Long-term investments accounted for at cost:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	20,540	$	22,648	$	15,540	$	16,962
Real estate partnership	752		1,142		827		1,391
Investments accounted for at cost	$	21,292	$	23,790	$	16,367	$	18,353

Long-term investment partnership accounted for under the equity method:

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	June 30, 2013		December 31, 2012
Investment partnership	$	6,671	$	6,432

The Company recorded equity income of $846 and $823 for the three and six months endedJune 30, 2013, respectively, related to the limited partnership. The Company recorded an equity loss of $1,215 and $1,329 for the three and six months endedJune 30, 2012, respectively, related to the limited partnership.

The carrying value of the investment was approximately $6,671 and $6,432 as of June 30, 2013 and December 31, 2012, respectively, which approximated the investment's fair value.

5. NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

Notes payable, long-term debt and other obligations consist of:

	June 30, 2013			December 31, 2012
Vector:
7.75% Senior Secured Notes due 2021	$	450,000		$	—
11% Senior Secured Notes due 2015, net of unamortized discount of $0 and $408	—			414,592
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383*	24,117			19,617
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038*	70,884			62,492
3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107*	7,224			7,115
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795*	70,991			68,205
Liggett:
Revolving credit facility	27,034			29,430
Term loan under credit facility	4,032			4,179
Equipment loans	14,211			17,810
Other	3,765			284
Total notes payable, long-term debt and other obligations	672,258			623,724
Less:
Current maturities	(33,906		)	(36,778		)
Amount due after one year	$	638,352		$	586,946

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($9,007 at June 30, 2013 and $11,682 at December 31, 2012, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($17,075 at June 30, 2013 and $22,146 at December 31, 2012, respectively), the 3.875% Variable Interest Senior Convertible Debentures ($42,985 at June 30, 2013 and $39,714 at December 31, 2012, respectively), and the 7.50% Variable Interest Senior Convertible Debentures ($97,562 at June 30, 2013 and $98,586 at December 31, 2012, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

Credit Facility - Liggett:

In February 2012, Liggett and Wells Fargo Bank, National Association ("Wells Fargo") renewed the $50,000 credit facility (the "Credit Facility"). The Credit Facility is collateralized by all inventories and receivables of Liggett and a mortgage on its manufacturing facility. The Credit Facility expires on March 8, 2015; provided that Liggett may terminate the Credit Facility prior to March 8, 2015 at any time by giving at least 30 days prior written notice to Wells Fargo, and Wells Fargo

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

may, at Well Fargo's option, terminate the Credit Facility at any time upon the occurrence and during the continuance of an Event of Default.

Prime rate loans under the Credit Facility bear interest at a rate equal to the prime rate of Wells Fargo and Eurodollar rate loans bear interest at a rate equal to 2.0% more than Wells Fargo's adjusted Eurodollar rate. The Credit Facility contains covenants that provide that Liggett's earnings before interest, taxes, depreciation and amortization, as defined under the Credit Facility, on a trailing twelve month basis, shall not be less than $100,000 if Liggett's Excess Availability, as defined under the Credit Facility, is less than $20,000. The covenants also require that annual Capital Expenditures, as defined under the Credit Facility (before a maximum carryover amount of $2,500), shall not exceed $15,000 during any fiscal year.

Term Loan under Credit Facility - Liggett:

In February 2012, Wells Fargo amended and restated the existing $5,600 term loan (the “Term Loan”) made to 100 Maple LLC (“Maple”), a subsidiary of Liggett, within the commitment under the Credit Facility. In connection with the amendment and restatement the maturity date of the Term Loan was extended to March 1, 2015 and the outstanding principal amount was paid down to $4,425. The Term Loan bears an interest rate equal to 1.75% more than Wells Fargo's adjusted Eurodollar rate. Monthly payments of $25 are due under the Term Loan from March 1, 2012 to February 1, 2015 ($885 in total) with the balance of $3,540 due at maturity on March 1, 2015.

The Term Loan is collateralized by the existing collateral securing the Credit Facility, including, without limitation, certain real property owned by Maple. The Term Loan did not increase the $50,000 borrowing amount of the Credit Facility, but did increase the outstanding amounts under the Credit Facility by the amount of the term loan and proportionately reduces the maximum borrowing availability under the Credit Facility.

As of June 30, 2013, a total of $31,066 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the facility was approximately $18,934 based on eligible collateral at June 30, 2013.

7.75% Senior Secured Notes due 2021 - Vector:

In February 2013, the Company issued $450,000 of its 7.75% Senior Secured Notes due 2021 in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. The aggregate net proceeds from the issuance of the 7.75% Senior Secured Notes were approximately $438,250 after deducting offering expenses. The Company used the net proceeds of the issuance for a cash tender offer announced on January 29, 2013, with respect to any and all of its outstanding 11% Senior Secured Notes due 2015. The Company retired $336,315 of the 11% Senior Secured Notes at a premium of 104.292%, plus accrued and unpaid interest on February 12, 2013. The remaining $78,685 of the 11% Senior Secured Notes were called and retired on March 14, 2013 at a redemption price of 103.667% plus accrued and unpaid interest.

The 7.75% Senior Secured Notes pay interest on a semi-annual basis at a rate of 7.75% per year and mature on February 15, 2021. The Company may redeem some or all of the 7.75% Senior Secured Notes at any time prior to February 15, 2016 at a make-whole redemption price. On or after February 15, 2016 the Company may redeem some or all of the 7.75% Senior Secured Notes at a premium that will decrease over time, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date. At any time prior to February 15, 2016, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 7.75% Senior Secured Notes with the net proceeds of certain equity offerings at 107.75% of the aggregate principal amount thereof, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date. In the event of a change of control, as defined in the indenture governing the 7.75% Senior Secured Notes, each holder of the 7.75% Senior Secured Notes may require the Company to repurchase some or all of its 7.75% Senior Secured Notes at a repurchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest and liquidated damages, if any to the date of purchase.

The 7.75% Senior Secured Notes are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of the Company’s cigarette businesses. (See Note 12.) In addition, some of the guarantees are collateralized by second priority or first priority security interests in certain collateral of some of the subsidiary guarantors, including their common stock, pursuant to security and pledge agreements.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

 In connection with the issuance of the 7.75% Senior Secured Notes, the Company entered into a Registration Rights Agreement. The Company agreed to consummate a registered exchange offer for the 7.75% Senior Secured Notes within 360 days after the date of the initial issuance of the 7.75% Senior Secured Notes. In June 2013, the Company completed an offer to exchange the 7.75% Senior Secured Notes issued in February 2013 for an equal amount of newly issued 7.75% Senior Secured Notes due 2021. The new 7.75% Senior Secured Notes have substantially the same terms as the original notes, except that the new 7.75% Senior Secured Notes have been registered under the Securities Act.

The indenture contains covenants that restrict the payment of dividends by the Company if the Company's consolidated earnings before interest, taxes, depreciation and amortization, as defined in the indenture, for the most recently ended four full quarters is less than $75,000. The indenture also restricts the incurrence of debt if the Company's Leverage Ratio and its Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively. The Company's Leverage Ratio is defined in the indenture as the ratio of the Company's and the guaranteeing subsidiaries' total debt less the fair market value of the Company's cash, investments in marketable securities and long-term investments to Consolidated EBITDA, as defined in the indenture. The Company's Secured Leverage Ratio is defined in the indenture in the same manner as the Leverage Ratio, except that secured indebtedness is substituted for indebtedness.

11% Senior Secured Notes due 2015 - Vector:

On January 29, 2013, the Company announced a cash tender offer with respect to any and all of its outstanding $415,000 principal amount of its 11% Senior Secured Notes due 2015. The Company retired $336,315 of the 11% Senior Secured Notes at a premium of 104.292%, plus accrued and unpaid interest on February 12, 2013. The remaining $78,685 of the 11% Senior Secured Notes were called and retired on March 14, 2013 at a redemption price of 103.667% plus accrued and unpaid interest. The Company recorded a loss on the extinguishment of the debt of $21,458 for the six months ended June 30, 2013. The loss included premium and tender costs of $17,820 and non-cash interest expense of $3,638 related to the write-off of net unamortized debt discount and deferred finance costs.

3.875% Variable Interest Senior Convertible Debentures due 2026 - Vector:

Holders of the Debentures converted $2 principal amount of the Debentures into 131 shares of the Company's common stock in February 2012 and $31,370 principal amount into 2,053,065 shares of common stock in June 2012. The Company recorded non-cash accelerated interest expense related to the converted debt of $7,888 for the three and six months ended June 30, 2012. The debt conversion resulted in a reclassification from debt to equity in the amount of $31,372. As of June 30, 2012, the principal amount of the Debentures outstanding was $67,628.

The holders of the Debentures had the option to put all of the remaining senior convertible notes on June 15, 2012. None of the Debentures were surrendered for repurchase by the Company. The holders of the Debentures next have the option to put all or part of the remaining Debentures to the Company on June 15, 2016. Accordingly, the Company reclassified the Debentures and related fair value of derivatives embedded within convertible debt from current liabilities to long-term liabilities.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Non-cash Interest Expense - Vector:

Components of non-cash interest expense are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Amortization of debt discount	$	8,464	$	4,004	$	15,812	$	7,441
Amortization of deferred finance costs	447		751		1,044		1,461
Loss on extinguishment of 11% Senior Secured Notes	—		—		3,638		—
Accelerated interest expense on 3.875% Variable Interest Senior Convertible Debentures converted	—		7,888		—		7,888
	$	8,911	$	12,643	$	20,494	$	16,790

Fair Value of Notes Payable and Long-term Debt:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	672,258	$	1,030,462	$	623,724	$	963,672

Notes payable and long-term debt are carried on the condensed balance sheet at amortized cost. The fair value determination disclosed above would be classified as Level 2 under the fair value hierarchy disclosed in Note 9 if such liabilities were recorded on the condensed balance sheet at fair value. The estimated fair value of the Company's notes payable and long-term debt has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company's credit risk as described in Note 1. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein are not necessarily indicative of the amount that could be realized in a current market exchange.

6. CONTINGENCIES

Tobacco-Related Litigation:

Overview

Since 1954, Liggett and other United States cigarette manufacturers have been named as defendants in numerous direct, third-party and purported class actions predicated on the theory that cigarette manufacturers should be liable for damages alleged to have been caused by cigarette smoking or by exposure to secondary smoke from cigarettes. New cases continue to be commenced against Liggett and other cigarette manufacturers. The cases have generally fallen into the following categories: (i) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs (“Individual Actions”); (ii) lawsuits by individuals requesting the benefit of the Engle ruling ("Engle progeny cases"); (iii) smoking and health cases primarily alleging personal injury or seeking court-supervised programs for ongoing medical monitoring, as well as cases alleging the use of the terms “lights” and/or “ultra lights” constitutes a deceptive and unfair trade practice, common law fraud or violation of federal law, purporting to be brought on behalf of a class of individual plaintiffs (“Class Actions”); and (iv) health care cost recovery actions brought by various foreign and domestic governmental plaintiffs and non-governmental plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits (“Health Care Cost Recovery Actions”). As new cases are commenced, the costs associated with defending these cases and the risks relating to the inherent unpredictability of litigation continue to increase. The future financial impact of the risks and expenses of litigation are not quantifiable at this time. For the six months ended June 30,

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

2013 and 2012, Liggett incurred legal expenses and other litigation costs totaling approximately $3,562 and $4,030, respectively.

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases. Management reviews on a quarterly basis with counsel all pending litigation and evaluates whether an estimate can be  made of the possible loss or range of loss that could result from an unfavorable outcome. An unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages awarded in some tobacco-related litigation can be significant.

Bonds. Although Liggett has been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from seeking to collect judgments while adverse verdicts are on appeal, there remains a risk that such relief may not be obtainable in all cases. This risk has been reduced given that a majority of states now limit the dollar amount of bonds or require no bond at all. To obtain stays on judgments pending current appeals, Liggett has secured approximately $7,577 in bonds as of June 30, 2013.

In June 2009, Florida amended its existing bond cap statute by adding a $200,000 bond cap that applies to all Engle progeny cases in the aggregate and establishes individual bond caps for individual Engle progeny cases in amounts that vary depending on the number of judgments in effect at a given time. Plaintiffs, in several cases, have challenged the constitutionality of the bond cap statute, but to date, the courts that have addressed the issue have upheld the constitutionality of the statute. The plaintiffs have appealed some of these rulings and the Florida Supreme Court, after granting review of the Hall decision denying plaintiff's challenge to the bond cap statute, subsequently dismissed the matter prior to the scheduled argument as moot. No federal court has yet addressed the issue. Although the Company cannot predict the outcome of such challenges, it is possible that the Company's consolidated financial position, results of operations, and cash flows could be materially affected by an unfavorable outcome of such challenges.

Accounting Policy. The Company and its subsidiaries record provisions in their consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except as disclosed in this Note 6: (i) management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; or (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome of any of the pending tobacco-related cases and, therefore, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes, if any. Legal defense costs are expensed as incurred.

Cautionary Statement About Engle Progeny Cases. Judgments have been entered against Liggett and other industry defendants in Engle progeny cases. Several of the judgments have been affirmed on appeal. To date, the United States Supreme Court has declined to review these cases. At June 30, 2013, Liggett and the Company were defendants in 3,043 state and 1,257 federal Engle progeny cases. As of June 30, 2013, 14Engle progeny cases where Liggett was a defendant at trial resulted in verdicts, exclusive of the Lukacs case, discussed below. Thirteen of these cases were in state court and one was in federal court. Nine verdicts were returned in favor of the plaintiffs and five in favor of Liggett. Other cases have either been voluntarily dismissed by plaintiffs, dismissed by the court on summary judgment or a mistrial was declared. Excluding the Lukacs case, the compensatory verdicts against Liggett have ranged from $1 to $3,008. In certain cases, the judgments entered have been joint and several with other defendants. In two of the cases, punitive damages were awarded against Liggett for $1,000 and $7,600. After exhausting all appeals, Liggett paid the judgments and related costs and interest in the Campbell and Clay cases. Since February 2009, when Engle progeny trials commenced, 85 state cases and 13 federal cases have been tried to a verdict. Based on the current rate of trials per year, it would require decades to resolve the remaining cases. Except as discussed in this Note 6, with respect to the seven cases where an adverse verdict was entered against Liggett and which are currently on appeal, management is unable to estimate the possible loss or range of loss from the remaining Engle progeny cases as there are currently multiple defendants in each case and, in most cases, discovery has not occurred or is limited. As a result, the Company lacks information about whether plaintiffs are in fact Engle class members (non-class members' claims are generally time-barred), the relevant smoking history, the nature of the alleged injury and the availability of various defenses, among other things. Further, plaintiffs typically do not specify their demand for damages. The Company believes that the process under which Engle progeny cases are tried is unconstitutional and continues to pursue its appellate rights.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Although Liggett has generally been successful in managing litigation, litigation is subject to uncertainty and significant challenges remain, particularly with respect to the Engle progeny cases. There can be no assurances that Liggett's past litigation experience will be representative of future results. Judgments have been entered against Liggett in the past, in Individual Actions and Engle progeny cases, and several of those judgments were affirmed on appeal and satisfied by Liggett. Litigation is subject to many uncertainties. It is possible that the consolidated financial position, results of operations and cash flows of the Company could be materially adversely affected by an unfavorable outcome or settlement of certain pending smoking-related litigation. Liggett believes, and has been so advised by counsel, that it has valid defenses to the litigation pending against it, as well as valid bases for appeal of adverse verdicts. All such cases are, and will continue to be, vigorously defended. Liggett may, however, enter into settlement discussions in particular cases if it believes it is in its best interest to do so. In connection with the Engle progeny cases, Liggett has been receptive to opportunities to settle these cases, individually or on some aggregated basis, on terms it believes are economically favorable to Liggett and will continue to explore such opportunities.  Recently, the federal court ordered the parties to engage in mediation to explore the prospect for a global resolution of the federal cases. As of June 30, 2013, Liggett (and in certain cases the Company), has settled 144Engle progeny cases for approximately $1,146, in the aggregate.  If Liggett were able to resolve the Engle progeny cases on an aggregated basis, Liggett believes the range of loss could be between $34,000 and $85,000, but there can be no assurances that the Engle progeny cases can be resolved on an aggregated basis, nor can there be any assurances that Liggett's settlement experience to date will be representative of future results or intentions.

Individual Actions

As of June 30, 2013, there were 63 Individual Actions pending against Liggett and, in certain cases, the Company, where one or more individual plaintiffs allege injury resulting from cigarette smoking, addiction to cigarette smoking or exposure to secondary smoke and seek compensatory and, in some cases, punitive damages. These cases do not include Engle progeny cases or the approximately 100 individual cases pending in West Virginia state court as part of a consolidated action. The following table lists the number of Individual Actions, by state, that are pending against Liggett or the Company as of June 30, 2013:

State	Number of Cases
Florida	45
New York	9
Louisiana	3
Maryland	2
West Virginia	2
Missouri	1
Ohio	1

The plaintiffs' allegations of liability in cases in which individuals seek recovery for injuries allegedly caused by cigarette smoking are based on various theories of recovery, including negligence, gross negligence, breach of special duty, strict liability, fraud, concealment, misrepresentation, design defect, failure to warn, breach of express and implied warranties, conspiracy, aiding and abetting, concert of action, unjust enrichment, common law public nuisance, property damage, invasion of privacy, mental anguish, emotional distress, disability, shock, indemnity and violations of deceptive trade practice laws, the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), state RICO statutes and antitrust statutes. In many of these cases, in addition to compensatory damages, plaintiffs also seek other forms of relief including treble/multiple damages, medical monitoring, disgorgement of profits and punitive damages. Although alleged damages often are not determinable from a complaint, and the law governing the pleading and calculation of damages varies from state to state and jurisdiction to jurisdiction, compensatory and punitive damages have been specifically pleaded in a number of cases, sometimes in amounts ranging into the hundreds of millions and even billions of dollars.

Defenses raised in Individual Actions include lack of proximate cause, assumption of the risk, comparative fault and/or contributory negligence, lack of design defect, statute of limitations, equitable defenses such as “unclean hands” and lack of benefit, failure to state a claim and federal preemption.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Engle Progeny Cases

EngleCase. In May 1994, Engle was filed against Liggett and others in Miami-Dade County, Florida. The class consisted of all Florida residents who, by November 21, 1996, “have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarette smoking.” In July 1999, after the conclusion of Phase I of the trial, the jury returned a verdict against Liggett and other cigarette manufacturers on certain issues determined by the trial court to be “common” to the causes of action of the plaintiff class. The jury made several findings adverse to the defendants including that defendants' conduct “rose to a level that would permit a potential award or entitlement to punitive damages.” Phase II of the trial was a causation and damages trial for three of the class plaintiffs and a punitive damages trial on a class-wide basis before the same jury that returned the verdict in Phase I. In April 2000, the jury awarded compensatory damages of $12,704 to the three class plaintiffs, to be reduced in proportion to the respective plaintiff’s fault. In July 2000, the jury awarded approximately $145,000,000 in punitive damages, including $790,000 against Liggett.

In May 2003, Florida’s Third District Court of Appeal reversed the trial court and remanded the case with instructions to decertify the class. The judgment in favor of one of the three class plaintiffs, in the amount of $5,831, was overturned as time barred and the court found that Liggett was not liable to the other two class plaintiffs.

In July 2006, the Florida Supreme Court affirmed the decision vacating the punitive damages award and held that the class should be decertified prospectively, but determined that the following Phase I findings are entitled to res judicata effect in Engle progeny cases: (i) that smoking causes lung cancer, among other diseases; (ii) that nicotine in cigarettes is addictive; (iii) that defendants placed cigarettes on the market that were defective and unreasonably dangerous; (iv) that defendants concealed material information knowing that the information was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking; (v) that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers would rely on the information to their detriment; (vi) that defendants sold or supplied cigarettes that were defective; and (vii) that defendants were negligent. The Florida Supreme Court decision also allowed former class members to proceed to trial on individual liability issues (using the above findings) and compensatory and punitive damage issues, provided they filed their individual lawsuits by January 2008. In December 2006, the Florida Supreme Court added the finding that defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to the representations made by defendants. In October 2007, the United States Supreme Court denied defendants' petition for writ of certiorari.

Pursuant to the Florida Supreme Court’s July 2006 ruling in Engle, which decertified the class on a prospective basis, and affirmed the appellate court’s reversal of the punitive damages award, former class members had until January 2008 in which to file individual lawsuits. As of June 30, 2013, Liggett and the Company are named defendants in 4,300Engle progeny cases in both federal (1,257 cases) and state (3,043 cases) courts in Florida. These cases include approximately 5,481 plaintiffs. Other cigarette manufacturers are also named as defendants in these cases, although as a case proceeds, one or more defendants may ultimately be dismissed from the action. The number of state court Engle progeny cases may increase as multi-plaintiff cases continue to be severed into individual cases. The number of federal cases may increase as plaintiffs have appealed the dismissal of over 800 cases by the federal court. The total number of plaintiffs may also increase as a result of attempts by existing plaintiffs to add additional parties. Although the Company was not named as a defendant in the Engle case, it has been named as a defendant in most of the Engle progeny cases where Liggett is named as a defendant.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

As of June 30, 2013, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Net Compensatory Damages	Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Affirmed by the Third District Court of Appeal. Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Affirmed by the Second District Court of Appeal. In March 2013, the Florida Supreme Court affirmed. Liggett intends to file a petition for writ of certiorari to the US Supreme Court.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
April 2010	Putney v. R.J. Reynolds	Broward	$3,008	None	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings. Plaintiff filed a motion for rehearing.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	On appeal to the Fourth District Court of Appeal. Oral argument occurred on June 19, 2013. A decision is pending.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	A joint and several judgment for $487 was entered against Liggett and RJR. On appeal to the First District Court of Appeal. Oral argument occurred on July 17, 2013.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against all defendants. On appeal to the Fourth District Court of Appeal.
December 2012	Buchanan v. R.J. Reynolds	Leon	$2,035	None	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. On appeal to the First District Court of Appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court on June 24, 2013.

The Company's potential range of loss in the Douglas, Putney, Tullo,Ward, Calloway,Buchanan and Cohen cases is between $0 and $16,371 in the aggregate, plus accrued interest and legal fees. In determining the range of loss, the Company considers potential settlements as well as future appellate relief. Except as disclosed elsewhere in this Note 6, the Company is unable to determine a range of loss related to the remaining Engle progeny cases. No amounts have been expensed or accrued in the accompanying consolidated financial statements for these cases. However, as cases proceed through the appellate process, the Company will consider accruals on a case-by-case basis if an unfavorable outcome becomes probable and the amount can be reasonably estimated.

LukacsCase. In June 2002, the jury in a Florida state court action entitled Lukacs v. R.J. Reynolds Tobacco Co., awarded $37,500 in compensatory damages, jointly and severally, in a case involving Liggett and two other cigarette manufacturers, which amount was subsequently reduced by the court. The jury found Liggett 50% responsible for the damages incurred by the plaintiff. The Lukacs case was the first case to be tried as an individual Engle progeny case, but was tried almost five years prior to the Florida Supreme Court's final decision in Engle. In November 2008, the court entered final judgment in the amount of $24,835, plus interest from June 2002. In March 2010, the Third District Court of Appeal affirmed the decision, per curiam. Liggett satisfied its share of the judgment, including attorneys' fees and accrued interest, for $14,361.

Federal Engle Progeny Cases. Three federal judges (in the Merlob, B. Brown and Burr cases) ruled that the findings in Phase I of the Engle proceedings could not be used to satisfy elements of plaintiffs' claims, and two of those rulings (B.Brown and Burr) were certified by the trial court for interlocutory review. The certification was granted by the United States Court of Appeals for the Eleventh Circuit and the appeals were consolidated (in February 2009, the appeal in Burr was dismissed for lack of prosecution). In July 2010, the Eleventh Circuit ruled that plaintiffs do not have an unlimited right to use the findings from the original Engle trial to meet their burden of establishing the elements of their claims at trial. Rather, plaintiffs may only use the findings to establish specific facts that they demonstrate with a reasonable degree of certainty

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

were actually decided by the original Engle jury. The Eleventh Circuit remanded the case to the district court to determine what specific factual findings the Engle jury actually made. All federal cases were stayed pending review by the Eleventh Circuit. The stays were subsequently lifted in a number of cases. At present, Liggett is a defendant in eight of the active cases.

Appeals of Engle Progeny Verdicts. In December 2010, in the Martin case, a state court case against R.J. Reynolds, the First District Court of Appeal issued the first ruling by a Florida intermediate appellate court to address the B. Brown decision discussed above. The panel held that the trial court correctly construed the Florida Supreme Court's 2006 decision in Engle in instructing the jury on the preclusive effect of the Phase I Engle proceedings, expressly disagreeing with certain aspects of the B. Brown decision. In July 2011, the Florida Supreme Court declined to review the First District Court of Appeal's decision. In March 2012, the United States Supreme Court declined to review the Martin case, along with the Campbell case and two other Engle progeny cases. This decision could lead to other adverse rulings by state appellate courts.

In the Waggoner case, the United States District Court for the Middle District of Florida directed the parties to brief the applicability of the Engle findings to all Middle District cases. Liggett and the Company are not defendants in Waggoner, but nonetheless, were directed to submit motions on the issues. In December 2011, the district court ruled that it was bound by Martin and Jimmie Lee Brown (discussed below) and that the application of the Phase I findings did not deprive defendants of any constitutional due process rights. The court ruled, however, that plaintiffs must establish legal causation to establish liability. With respect to punitive damages, the district court held that the plaintiffs could rely on the findings in support of their punitive damages claims but that, in addition, plaintiffs must demonstrate specific conduct by specific defendants, independent of the Engle findings, that satisfies the standards for awards of punitive damages. The Waggoner ruling applies to all of the cases pending in the Middle District of Florida.  The Waggoner court declined to address certain issues raised by Liggett and the Company and directed that their motion be re-filed in a case in which they were named as defendants.  As a result, Liggett filed a motion in the Young-McCray case raising issues specific to Liggett.  The court denied the motion and adopted the Waggoner ruling as to Liggett. Liggett was subsequently dropped as a defendant before trial. These issues are on appeal to the United States Court of Appeals for the Eleventh Circuit in Walker and Duke, cases in which Liggett is not a party. Oral argument is scheduled for July 31, 2013.

In Jimmie Lee Brown, a state court case against R.J. Reynolds, the trial court tried the case in two phases. In the first phase, the jury determined that the smoker was addicted to cigarettes that contained nicotine and that his addiction was a legal cause of his death, thereby establishing he was an Engle class member. In the second phase, the jury determined whether the plaintiff established legal cause and damages with regard to each of the underlying claims.  The jury found in favor of plaintiff in both phases.  In September 2011, the Fourth District Court of Appeal affirmed the judgment entered in plaintiff's favor and approved the trial court's procedure of bifurcating the trial.  The Fourth District Court of Appeal agreed with Martin that individual post-Engle plaintiffs need not prove conduct elements as part of their burden of proof, but disagreed with Martin to the extent that the First District Court of Appeal only required a finding that the smoker was a class member to establish legal causation as to addiction and the underlying claims.  The Fourth District Court of Appeal held that in addition to establishing class membership, Engle progeny plaintiffs must also establish legal causation and damages as to each claim asserted.  In so finding, the Fourth District Court of Appeal's decision in Jimmie Lee Brown is in conflict with Martin.  In dicta, the Fourth District Court of Appeal further voiced concern that the preclusive effect of the Engle findings violates the tobacco company defendants' due process rights and, in the special concurring opinion, the court emphasized that until the Florida Supreme Court gives trial courts guidance as to what it intended by its Engle decision, trial courts will continue to play “a form of legal poker.” In September 2011, R.J. Reynolds filed a motion asking the Fourth District Court of Appeal to certify the case to the Florida Supreme Court for review. The motion was denied in October 2011.

In the Rey case, a state court Engle progeny case, the trial court entered final summary judgment on all claims in favor of the Company, Liggett and Lorillard based on what has been referred to in the Engle progeny litigation as the "Liggett Rule."  The Liggett Rule stands for the proposition that a manufacturer cannot have liability to a smoker under any asserted claim if the smoker did not use a product manufactured by that particular defendant.  The Liggett Rule is based on the entry of final judgment in favor of Liggett/Brooke Group in Engle on all of the claims asserted against them by class representatives Mary Farnan and Angie Della Vecchia, even though the Florida Supreme Court upheld, as res judicata,the generic finding that Liggett/Brooke Group engaged in a conspiracy to commit fraud by concealment. In September 2011, the Third District Court of Appeal affirmed in part and reversed in part holding that the defendants were entitled to summary judgment on all claims asserted against them other than the claim for civil conspiracy.  Defendants' motions for rehearing were denied with regard to the Liggett Rule issues.  Defendants sought further review by the Florida Supreme Court and on August 20, 2012, the petition for review was denied. In March 2012, the Fifth District Court of Appeal, in other progeny cases, followed the

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Third District Court of Appeal and reversed summary judgment on the conspiracy claims. The Florida Supreme Court refused to accept jurisdiction of defendants' appeals.

In March 2012, in Douglas, the Second District Court of Appeal issued a decision affirming the judgment of the trial court in favor of the plaintiff and upholding the use of the Engle jury findings but certified to the Florida Supreme Court the question of whether granting res judicata effect to the Engle jury findings violates defendants' federal due process rights. In March 2013, the Florida Supreme Court affirmed the use of Engle jury findings and determined that there is no violation of the defendants' due process rights. The defendants intend to file a petition for writ of certiorari to the United States Supreme Court.

In June 2013, in Capone, the Florida Supreme Court held that the Florida Wrongful Death Act does not require the filing of a new action for wrongful death.  Rather, upon the death of a party plaintiff in a personal injury action, the personal representative of the decedent's estate may be substituted as plaintiff and, thereafter, shall have a reasonable opportunity to file an amended pleading that alleges new or amended claims and causes of action.

In June 2013, in Sury, the First District Court of Appeal held that where the jury found defendants liable under both negligence and intentional tort theories, the trial court did not abuse its discretion in refusing to reduce the damages awarded by the jury by the percentage of fault attributable to decedent.

Liggett Only Cases.  There are currently five cases pending where Liggett is the only remaining tobacco company defendant. These cases consist of three Individual Actions and twoEngle progeny cases. In one of the Individual Actions, Hausrath (NY state court), plaintiff moved to restore the case to the active docket calendar. The motion was granted by the court. There has been no recent activity in the other two Individual Actions. One of the Engle progeny cases, Katz, is currently set for trial on January 6, 2014. Cases where Liggett is the only defendant could increase substantially as a result of the Engle progeny cases.

Class Actions

As of June 30, 2013, there were four actions pending for which either a class had been certified or plaintiffs were seeking class certification, where Liggett is a named defendant, including one alleged price fixing case. Other cigarette manufacturers are also named in these actions.

Plaintiffs' allegations of liability in class action cases are based on various theories of recovery, including negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, nuisance, breach of express and implied warranties, breach of special duty, conspiracy, concert of action, violation of deceptive trade practice laws and consumer protection statutes and claims under the federal and state anti-racketeering statutes. Plaintiffs in the class actions seek various forms of relief, including compensatory and punitive damages, treble/multiple damages and other statutory damages and penalties, creation of medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and equitable relief.

Defenses raised in these cases include, among others, lack of proximate cause, individual issues predominate, assumption of the risk, comparative fault and/or contributory negligence, statute of limitations and federal preemption.

In Smith v. Philip Morris, a Kansas state court case filed in February 2000, plaintiffs allege that cigarette manufacturers conspired to fix cigarette prices in violation of antitrust laws. Plaintiffs seek to recover an unspecified amount in actual and punitive damages. Class certification was granted in November 2001. In January 2012, the trial court heard oral argument on defendants' motions for summary judgment and in March 2012, the court granted the motions and dismissed plaintiffs' claims with prejudice. In July 2012, plaintiffs noticed an appeal. The appeal is pending.

In November 1997, in Young v. American Tobacco Co., a purported personal injury class action was commenced on behalf of plaintiff and all similarly situated residents in Louisiana who, though not themselves cigarette smokers, are alleged to have been exposed to secondhand smoke from cigarettes which were manufactured by the defendants, and who suffered injury as a result of that exposure. The plaintiffs seek to recover an unspecified amount of compensatory and punitive damages. In October 2004, the trial court stayed this case pending the outcome of an appeal in another matter, which has been concluded. There has been no further activity in this case.

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In February 1998, in Parsons v. AC & S Inc., a case pending in West Virginia, a class was commenced on behalf of all West Virginia residents who allegedly have personal injury claims arising from exposure to cigarette smoke and asbestos fibers. The complaint seeks to recover $1,000 in compensatory and punitive damages individually and unspecified compensatory and punitive damages for the class. The case is stayed as a result of the December 2000 bankruptcy of three of the defendants.

Although not technically a class action, in In Re: Tobacco Litigation (Personal Injury Cases), a West Virginia state court consolidated approximately 750 individual smoker actions that were pending prior to 2001 for trial of certain common issues. In January 2002, the court severed Liggett from the trial of the consolidated action, which commenced in June 2010 and ended in a mistrial. The rescheduled trial commenced in October 2011 and it, too, ended in a mistrial. A new trial commenced on April 15, 2013. On May 15, 2013, the jury rejected all but one of the plaintiffs' claims, finding for the plaintiffs on the claim that ventilated filter cigarettes, sold between 1964 and July 1, 1969, should have included instructions on how to use them. On July 15, 2013, plaintiffs filed a renewed motion for judgment as a matter of law and a motion for a new trial. Defendants filed a motion for judgment notwithstanding the verdict. The issue of damages was reserved for further proceedings that have not yet been scheduled. If the case were to proceed against Liggett, it is estimated that Liggett could be a defendant in approximately 100 of the individual cases.

Class action suits have been filed in a number of states against cigarette manufacturers, alleging, among other things, that use of the terms “lights” and “ultra lights” constitutes unfair and deceptive trade practices. In December 2008, the United States Supreme Court, in Altria Group v. Good, ruled that the Federal Cigarette Labeling and Advertising Act did not preempt the state law claims asserted by the plaintiffs and that they could proceed with their claims under the Maine Unfair Trade Practices Act. The Good decision has resulted in the filing of additional “lights” class action cases in other states against other cigarette manufacturers. Although Liggett was not a defendant in the Good case, and is not currently a defendant in any other “lights” class actions, an adverse ruling or commencement of additional “lights” related class actions could have a material adverse effect on the Company.

In addition to the cases described above, numerous class actions remain certified against other cigarette manufacturers. Adverse decisions in these cases could have a material adverse affect on Liggett’s sales volume, operating income and cash flows.

Health Care Cost Recovery Actions

As of June 30, 2013, there was one Health Care Cost Recovery Action pending against Liggett, Crow Creek Sioux Tribe v. American Tobacco Company, a South Dakota case filed in 1997, where the plaintiff seeks to recover damages based on various theories of recovery as a result of alleged sales of tobacco products to minors. The case is inactive. Other cigarette manufacturers are also named as defendants.

The claims asserted in health care cost recovery actions vary. Although, typically, no specific damage amounts are pled, it is possible that requested damages might be in the billions of dollars. In these cases, plaintiffs typically assert equitable claims that the tobacco industry was “unjustly enriched” by their payment of health care costs allegedly attributable to smoking and seek reimbursement of those costs. Relief sought by some, but not all, plaintiffs include punitive damages, multiple damages and other statutory damages and penalties, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of anti-smoking programs, additional disclosure of nicotine yields, and payment of attorney and expert witness fees.

Other claims asserted include the equitable claim of indemnity, common law claims of negligence, strict liability, breach of express and implied warranty, breach of special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, claims under state and federal statutes governing consumer fraud, antitrust, deceptive trade practices and false advertising, and claims under RICO.

Department of Justice Lawsuit. In September 1999, the United States government commenced litigation against Liggett and other cigarette manufacturers in the United States District Court for the District of Columbia. The action sought to recover an unspecified amount of health care costs paid and to be paid by the federal government for lung cancer, heart disease, emphysema and other smoking-related illnesses allegedly caused by the fraudulent and tortious conduct of defendants, to restrain defendants and co-conspirators from engaging in alleged fraud and other allegedly unlawful conduct in the future, and to compel defendants to disgorge the proceeds of their unlawful conduct. Claims were asserted under RICO.

In August 2006, the trial court entered a Final Judgment against each of the cigarette manufacturing defendants, except Liggett. In May 2009, the United States Court of Appeals for the District of Columbia affirmed most of the district court's decision. The United States Supreme Court denied review. As a result, the cigarette manufacturing defendants, other than

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Liggett, are now subject to the trial court's Final Judgment which ordered the following relief: (i) an injunction against “committing any act of racketeering” relating to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States; (ii) an injunction against participating directly or indirectly in the management or control of the Council for Tobacco Research, the Tobacco Institute, or the Center for Indoor Air Research, or any successor or affiliated entities of each; (iii) an injunction against “making, or causing to be made in any way, any material false, misleading, or deceptive statement or representation or engaging in any public relations or marketing endeavor that is disseminated to the United States' public and that misrepresents or suppresses information concerning cigarettes”; (iv) an injunction against conveying any express or implied health message through use of descriptors on cigarette packaging or in cigarette advertising or promotional material, including “lights,” “ultra lights,” and “low tar,” which the court found could cause consumers to believe one cigarette brand is less hazardous than another brand; (v) the issuance of “corrective statements” in various media regarding the adverse health effects of smoking, the addictiveness of smoking and nicotine, the lack of any significant health benefit from smoking “low tar” or “lights” cigarettes, defendants' manipulation of cigarette design to ensure optimum nicotine delivery and the adverse health effects of exposure to environmental tobacco smoke; (vi) the disclosure of defendants' public document websites and the production of all documents produced to the government or produced in any future court or administrative action concerning smoking and health; (vii) the disclosure of disaggregated marketing data to the government in the same form and on the same schedules as defendants now follow in disclosing such data to the Federal Trade Commission for a period of ten years; (viii) certain restrictions on the sale or transfer by defendants of any cigarette brands, brand names, formulas or cigarette business within the United States; and (ix) payment of the government's costs in bringing the action.

It is unclear what impact, if any, the Final Judgment will have on the cigarette industry as a whole. To the extent that the Final Judgment leads to a decline in industry-wide shipments of cigarettes in the United States or otherwise results in restrictions that adversely affect the industry, Liggett's sales volume, operating income and cash flows could be materially adversely affected.

Upcoming Trials

As of June 30, 2013, there were 34Engle progeny cases scheduled for trial through June 30, 2014, where Liggett and/or the Company are named defendants. There are additional cases against other cigarette manufacturers that are also scheduled for trial through June 30, 2014. Trial dates are, however, subject to change.

MSA and Other State Settlement Agreements

In March 1996, March 1997 and March 1998, Liggett entered into settlements of smoking-related litigation with 45 states and territories. The settlements released Liggett from all smoking-related claims made by those states and territories, including claims for health care cost reimbursement and claims concerning sales of cigarettes to minors.

In November 1998, Philip Morris, Brown & Williamson, R.J. Reynolds and Lorillard (the “Original Participating Manufacturers” or “OPMs”) and Liggett (together with any other tobacco product manufacturer that becomes a signatory, the “Subsequent Participating Manufacturers” or “SPMs”) (the OPMs and SPMs are hereinafter referred to jointly as the “Participating Manufacturers”) entered into the Master Settlement Agreement (the “MSA”) with 46 states, the District of Columbia, Puerto Rico, Guam, the United States Virgin Islands, American Samoa and the Northern Mariana Islands (collectively, the “Settling States”) to settle the asserted and unasserted health care cost recovery and certain other claims of the Settling States. The MSA received final judicial approval in each Settling State.

As a result of the MSA, the Settling States released Liggett from:

• all claims of the Settling States and their respective political subdivisions and other recipients of state health care funds, relating to: (i) past conduct arising out of the use, sale, distribution, manufacture, development, advertising and marketing of tobacco products; (ii) the health effects of, the exposure to, or research, statements or warnings about, tobacco products; and

• all monetary claims of the Settling States and their respective subdivisions and other recipients of state health care funds relating to future conduct arising out of the use of, or exposure to, tobacco products that have been manufactured in the ordinary course of business.

The MSA restricts tobacco product advertising and marketing within the Settling States and otherwise restricts the activities of Participating Manufacturers. Among other things, the MSA prohibits the targeting of youth in the advertising, promotion or marketing of tobacco products; bans the use of cartoon characters in all tobacco advertising and promotion; limits each Participating Manufacturer to one tobacco brand name sponsorship during any 12-month period; bans all outdoor advertising,

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with certain limited exceptions; prohibits payments for tobacco product placement in various media; bans gift offers based on the purchase of tobacco products without sufficient proof that the intended recipient is an adult; prohibits Participating Manufacturers from licensing third parties to advertise tobacco brand names in any manner prohibited under the MSA; and prohibits Participating Manufacturers from using as a tobacco product brand name any nationally recognized non-tobacco brand or trade name or the names of sports teams, entertainment groups or individual celebrities.

The MSA also requires Participating Manufacturers to affirm corporate principles to comply with the MSA and to reduce underage use of tobacco products and imposes restrictions on lobbying activities conducted on behalf of Participating Manufacturers. In addition, the MSA provides for the appointment of an independent auditor to calculate and determine the amounts of payments owed pursuant to the MSA.

Under the payment provisions of the MSA, the Participating Manufacturers are required to make annual payments of $9,000,000 (subject to applicable adjustments, offsets and reductions). These annual payments are allocated based on unit volume of domestic cigarette shipments. The payment obligations under the MSA are the several, and not joint, obligation of each Participating Manufacturer and are not the responsibility of any parent or affiliate of a Participating Manufacturer.

Liggett has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 1.65% of total cigarettes sold in the United States. Vector Tobacco has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 0.28% of total cigarettes sold in the United States. Liggett and Vector Tobacco's domestic shipments accounted for 3.5% of the total cigarettes sold in the United States in 2012. If Liggett’s or Vector Tobacco’s market share exceeds their respective market share exemption in a given year, then on April 15 of the following year, Liggett and/or Vector Tobacco, as the case may be, must pay on each excess unit an amount equal (on a per-unit basis) to that due from the OPMs for that year. On December 31, 2012, Liggett paid $105,000 of its $138,900 2012 MSA payment obligation. On April 15, 2013, Liggett and Vector Tobacco paid an additional $30,800, of which approximately $18,700 was paid into the disputed payments account. Liggett disputed, and withheld, approximately $3,100.

Certain MSA Disputes

NPM Adjustment.  In March 2006, an economic consulting firm selected pursuant to the MSA determined that the MSA was a “significant factor contributing to” the loss of market share of Participating Manufacturers, to non-participating manufacturers, for 2003. This is known as the “NPM Adjustment.” The economic consulting firm subsequently rendered the same decision with respect to 2004 and 2005. In March 2009, a different economic consulting firm made the same determination for 2006. As a result, the manufacturers are entitled to potential NPM Adjustments to each of their 2003 - 2006 MSA payments. The Participating Manufacturers are also entitled to potential NPM Adjustments to their 2007 - 2012 payments pursuant to agreements entered into between the OPMs and the Settling States under which the OPMs agreed to make certain payments for the benefit of the Settling States, in exchange for which the Settling States stipulated that the MSA was a “significant factor contributing to” the loss of market share of Participating Manufacturers for each of those years. A Settling State that has diligently enforced its qualifying escrow statute in the year in question may be able to avoid application of the NPM Adjustment to the payments made by the manufacturers for the benefit of that Settling State.

For 2003 through 2012, Liggett and Vector Tobacco, as applicable, disputed that they owed the Settling States the NPM Adjustments as calculated by the Independent Auditor. As permitted by the MSA, Liggett and Vector Tobacco withheld payment or paid into a disputed payment account the amounts associated with these NPM Adjustments.

Notwithstanding provisions in the MSA requiring arbitration, litigation was filed in 49 Settling States regarding whether the application of the NPM Adjustment for 2003 was to be determined through litigation or arbitration. These actions related to the potential NPM Adjustment for 2003, which the independent auditor under the MSA previously determined to be as much as $1,200,000 for all Participating Manufacturers. All but one of the 48 courts that decided the issue ruled that the 2003 NPM Adjustment dispute was arbitrable. One court, the Montana Supreme Court, ruled that Montana’s claim of diligent enforcement must be litigated. The United States Supreme Court denied certiorari with respect to that opinion. In June 2012, Montana and the Participating Manufacturers reached an agreement that the Participating Manufacturers will not contest Montana's diligent enforcement for 2003.

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In response to a proposal from the OPMs and many of the SPMs, 45 of the Settling States, representing approximately 90% of the allocable share of the Settling States, entered into an agreement providing for a nationwide arbitration of the dispute with respect to the NPM Adjustment for 2003. Because states representing more than 80% of the allocable share signed the agreement, signing states will receive a 20% reduction of any 2003 NPM adjustment awarded in the arbitration. In June 2010, the three person arbitration panel was selected. In November 2011, the Participating Manufacturers advised the arbitration panel that they were not contesting diligent enforcement of 16 Settling States. Substantive hearings commenced in April 2012 and were completed in June 2013. Decisions from the arbitration panel are pending. There can be no assurance that Liggett or Vector Tobacco will receive any adjustment as a result of these proceedings, other than as described below in connection with the settlement reached with certain Settling States.

Effective December 17, 2012, the Participating Manufacturers entered into a “term sheet” with 20 Settling States setting out terms for settlement of the NPM Adjustment for 2003 through 2012 and addressing the NPM Adjustment mechanism for those states for future years. Certain non-signatory states objected to the settlement. In March 2013, the arbitration panel entered a Stipulated Partial Settlement and Award which, among other things, overrules the objections of the non-signatory states and directed the independent auditor to implement the terms of the term sheet effective with the April 15, 2013 MSA payments. In May 2013, two additional states joined the settlement. Several non-signatory states are attempting to vacate the settlement award by filing state court actions. Although certain terms of the settlement were implemented by the independent auditor on April 15, 2013, no assurance can be given as to the ultimate outcome of the non-signatory states' challenges.

As a result of the settlement, in the first quarter of 2013 Liggett and Vector Tobacco recognized income of $5,602. Following the additional two states joining the settlement in May 2013, Liggett and Vector Tobacco recognized an additional $1,345 of income in the second quarter of 2013. The remaining NPM Adjustment accrual of $27,600 at June 30, 2013 relates to the disputed amounts Liggett and Vector Tobacco have withheld from the non-signatory states for 2004 through 2010. Approximately $16,600 remains in the disputed payments accounts relating to the dispute with these non-signatory states.

"Gross" v. "Net" Calculations.  In October 2004, the independent auditor notified Liggett and all other Participating Manufacturers that their payment obligations under the MSA, dating from the agreement’s execution in late 1998, had been recalculated using “net” units, rather than “gross” units (which had been used since 1999).

Liggett objected to this retroactive change and disputed the change in methodology. Liggett contends that the retroactive change from “gross” to “net” units is impermissible for several reasons, including:

• use of “net” units is not required by the MSA (as reflected by, among other things, the use of “gross” units through 2005);

• such a change is not authorized without the consent of affected parties to the MSA;

• the MSA provides for four-year time limitation periods for revisiting calculations and determinations, which precludes recalculating Liggett’s 1997 Market Share (and thus, Liggett’s market share exemption); and

• Liggett and others have relied upon the calculations based on “gross” units since 1998.

The change in the method of calculation could have resulted in Liggett owing as much as $38,800 of additional MSA payments for prior years, including interest, because the proposed change from “gross” to “net” units would have lowered Liggett’s grandfathered market share exemption under the MSA. The Company estimated that Liggett’s future annual MSA payments would have been at least approximately $2,500 higher if the method of calculation was changed. In August 2011, Liggett received notice from several states seeking to initiate arbitration as to this matter. In December 2012, the parties arbitrated the dispute before a panel of three arbitrators. On February 14, 2013, the arbitrators issued a decision granting the relief sought by Liggett.  The arbitrators ruled that the limitations provisions of the MSA precluded the independent auditor from recalculating Liggett's grandfathered market share exemption or Liggett's payment obligations beyond the last four years.  The arbitrators further ruled that, for purposes of calculating Liggett's payment obligations for the applicable years, Liggett's market share should be calculated on a net basis, increased by a factor of 1.25%.  Liggett filed a motion seeking reconsideration of the part of the arbitrators' decision that would require the 1.25% increase in Liggett's market share. The states objected to Liggett's motion and seek additional relief from the panel declaring that any adjustment ordered by the panel is not limited by the four year limitations set forth in the MSA. If the arbitrator's ruling is not modified, Liggett would be required to pay approximately $16,200 for the previous five years. If the relief requested by the states is granted, Liggett could be required to pay up to approximately $36,200. The panel had agreed to hear arguments on the motions on May 29, 2013, but due to

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the conditional settlement described below, the parties agreed to adjourn the hearing. In June 2013, Liggett and a negotiating group on behalf of the Settling States reached an agreement in principle to resolve all disputes regarding "gross" v. "net", subject to definitive documentation and approval thereof by each Settling State. The proposed settlement requires that Liggett pay $8,000 to the Settling States and agree to reduce its market share exemption from 1.645% to 1.63% starting in 2013 and for all years thereafter. In exchange, the Settling States will release Liggett from all claims in connection with the "gross" v. "net" dispute. The Company previously accrued $9,300 for the “gross” v. “net” dispute. There can be no assurance that the settlement will be approved and if it is not, that Liggett will be successful in seeking modification of the award by the panel or that Liggett will not be required to make additional payments, which could adversely affect the Company’s consolidated financial position, results of operations and cash flows.

Litigation Challenging the MSA.  Litigation challenging the validity of the MSA, including claims that the MSA violates antitrust laws, has not been successful to date, although several cases are pending. Participating Manufacturers are not typically named as defendants in these cases.

Other State Settlements.  The MSA replaced Liggett’s prior settlements with all states and territories except for Florida, Mississippi, Texas and Minnesota. Each of these four states, prior to the effective date of the MSA, negotiated and executed settlement agreements with each of the other major tobacco companies, separate from those settlements reached previously with Liggett. Except as described below, Liggett's agreements with these states remain in full force and effect. These states' settlement agreements with Liggett contained most favored nation provisions which could reduce Liggett's payment obligations based on subsequent settlements or resolutions by those states with certain other tobacco companies. Beginning in 1999, Liggett determined that, based on each of these four states' settlements with United States Tobacco Company, Liggett's payment obligations to those states had been eliminated. With respect to all non-economic obligations under the previous settlements, Liggett believes it is entitled to the most favorable provisions as between the MSA and each state's respective settlement with the other major tobacco companies. Therefore, Liggett's non-economic obligations to all states and territories are now defined by the MSA.

In 2003, as a result of a dispute with Minnesota regarding its settlement agreement, Liggett agreed to pay $100 a year, in any year cigarettes manufactured by Liggett are sold in that state. In 2003 and 2004, the Attorneys General for Florida, Mississippi and Texas advised Liggett that they believed that Liggett had failed to make certain required payments under the respective settlement agreements with these states. In December 2010, Liggett settled with Florida and agreed to pay $1,200 and to make further annual payments of $250 for a period of 21 years, starting in March 2011. The payments in years 12 – 21 will be subject to an inflation adjustment. These payments are in lieu of any other payments allegedly due to Florida under the original settlement agreement. The Company accrued approximately $3,200 for this matter in 2010. In February 2012, Mississippi provided Liggett with a 60-day notice that the state intended to pursue its remedies if Liggett did not cure the alleged defaults. Liggett responded to Mississippi's letter denying the existence of any defaults. There can be no assurance that Liggett will be able to resolve the matters with Texas and Mississippi or that Liggett will not be required to make additional payments which could adversely affect the Company's consolidated financial position, results of operations and cash flows.

Cautionary Statement.  Management is not able to predict the outcome of the litigation pending or threatened against Liggett or the Company. Litigation is subject to many uncertainties. Through June 30, 2013, Liggett has been found liable in tenEngle progeny cases. In three of the cases, the verdicts were affirmed on appeal and the judgments were satisfied by Liggett. Although Liggett has appealed the remaining adverse verdicts, appellate efforts to date have not been successful. Liggett has also had judgments entered against it in Individual Actions, which were affirmed on appeal and satisfied by Liggett. It is possible that other cases could be decided unfavorably against Liggett and that Liggett will be unsuccessful on appeal. Liggett may attempt to settle particular cases if it believes it is in its best interest to do so.

Management cannot predict the cash requirements related to any future defense costs, settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. An unfavorable outcome of a pending smoking-related case could encourage the commencement of additional litigation, or could lead to adverse decisions in the Engle progeny cases. Except as discussed in this Note 6, management is unable to estimate the loss or range of loss that could result from an unfavorable outcome of the cases pending against Liggett or the costs of defending such cases and as a result has not provided any amounts in its consolidated financial statements for unfavorable outcomes.

The tobacco industry is subject to a wide range of laws and regulations regarding the marketing, sale, taxation and use of tobacco products imposed by local, state and federal governments. There have been a number of restrictive regulatory actions, adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry. These developments may negatively affect the perception of potential triers of fact with respect to the

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tobacco industry, possibly to the detriment of certain pending litigation, and may prompt the commencement of additional litigation or legislation.

It is possible that the Company’s consolidated financial position, results of operations and cash flows could be materially adversely affected by an unfavorable outcome in any of the smoking-related litigation.

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2013 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement			Litigation Accruals			Total
Balance at January 1, 2013	$	32,970		$	1,470		$	34,440		$	52,639		$	1,862		$	54,501
Expenses	56,907			147			57,054			—			—			—
NPM Settlement adjustment	—			—			—			(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	364			—			364			—			—			—
Payments	(34,077		)	(1,577		)	(35,654		)	—			—			—
Reclassification from non-current liabilities	3,521			223			3,744			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			18			18			—			99			99
Balance as of June 30, 2013	$	59,685		$	281		$	59,966		$	35,630		$	1,738		$	37,368

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2012 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement		Litigation Accruals			Total
Balance at January 1, 2012	$	51,174		$	1,551		$	52,725		$	49,338	$	1,600		$	50,938
Expenses	69,956			179			70,135			—		—			—
Change in MSA obligations capitalized as inventory	173			—			173			—		—			—
Payments	(50,094		)	(574		)	(50,668		)	—		—			—
Reclassification from non-current liabilities	(905		)	224			(681		)	905		(224		)	681
Interest on withholding	—			24			24			1,172		385			1,557
Balance as of June 30, 2012	$	70,304		$	1,404		$	71,708		$	51,415	$	1,761		$	53,176

26

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Other Matters:

Liggett’s and Vector Tobacco’s management are unaware of any material environmental conditions affecting their existing facilities. Liggett’s and Vector Tobacco’s management believe that current operations are conducted in material compliance with all environmental laws and regulations and other laws and regulations governing cigarette manufacturers. Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect on the capital expenditures, results of operations or competitive position of Liggett or Vector Tobacco.

In February 2004, Liggett Vector Brands entered into a five year agreement with a subsidiary of the American Wholesale Marketers Association to support a program to permit certain tobacco distributors to secure, on reasonable terms, tax stamp bonds required by state and local governments for the distribution of cigarettes. This agreement has been extended through February 2016. Under the agreement, Liggett Vector Brands has agreed to pay a portion of losses incurred by the surety under the bond program, with a maximum loss exposure of $500 for Liggett Vector Brands. To secure its potential obligations under the agreement, Liggett Vector Brands has delivered to the subsidiary of the association a $100 letter of credit and agreed to fund up to an additional $400. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at June 30, 2013.

There may be several other proceedings, lawsuits and claims pending against the Company and certain of its consolidated subsidiaries unrelated to tobacco or tobacco product liability. Management is of the opinion that the liabilities, if any, ultimately resulting from such other proceedings, lawsuits and claims should not materially affect the Company’s financial position, results of operations or cash flows.

7. INCOME TAXES

The Company's provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual pre-tax results from ordinary operations. The annual effective income tax rate is reviewed and, if necessary, adjusted on a quarterly basis.

The Company's income tax expense (benefit) consisted of the following:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Income (loss) before provision for income taxes	$	23,528	$	5,128		$	21,512	$	(6,054	)
Income tax expense (benefit) using estimated annual effective income tax rate	9,575		1,904			8,755		(2,247		)
Changes in effective tax rates	321		98			—		—
Out-of-period adjustment related to non-deductible expenses in 2011	—		—			—		757
Impact of discrete items, net	121		(769		)	927		(769		)
Income tax expense (benefit)	$	10,017	$	1,233		$	9,682	$	(2,259	)

The discrete item for the three months ended June 30, 2013 is related to the accrual of an unrecognized tax benefit and the discrete items for the six months ended June 30, 2013 is related to the impact of the Company's loss on the extinguishment of the 11% Senior Secured Notes due to the differences in the Company's marginal tax rate and its anticipated effective annual income tax rate at June 30, 2013 and the accrual of an unrecognized tax benefit. The discrete item for the three and six months ended June 30, 2012 is related to the conversion of the Company's 3.875% Senior Convertible Debentures due 2026. The out-of-period adjustment for the six months ended June 30, 2012 is related to a non-accrual of a non-deductible expense related to permanent difference for income taxes in the fourth quarter of 2011.

27

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

8. NEW VALLEY LLC

The components of “Investments in non-consolidated real estate businesses” were as follows:

	June 30, 2013		December 31, 2012
Douglas Elliman Realty LLC	$	69,974	$	65,171
Sesto Holdings	5,037		5,037
1107 Broadway	6,579		5,566
Lofts 21	900		900
Hotel Taiwana	6,313		2,658
East 68th Street	7,000		7,000
11 Beach Street	10,508		9,642
Maryland Portfolio	4,206		4,615
701 Seventh Avenue	9,888		9,307
Queens Plaza	7,350		7,350
Chrystie Street	1,992		1,973
Leroy Street	1,150		—
101 Murray Street	11,981		—
Investments in non-consolidated real estate businesses	$	142,878	$	119,219

Residential Brokerage Business. New Valley recorded income of $6,815 and $4,929 for the three months ended June 30, 2013 and 2012, respectively, associated with Douglas Elliman Realty, LLC. New Valley recorded income of $7,438 and $6,373 for the six months ended June 30, 2013 and 2012, respectively, associated with Douglas Elliman Realty, LLC. New Valley received cash distributions from Douglas Elliman Realty, LLC of $1,311 and $564 for the three months ended June 30, 2013 and 2012, respectively. New Valley received cash distributions from Douglas Elliman Realty, LLC of $2,636 and $2,889 for the six months ended June 30, 2013 and 2012, respectively. The summarized financial information of Douglas Elliman Realty, LLC is as follows:

	June 30, 2013		December 31, 2012
Cash	$	89,491	$	78,015
Other current assets	8,665		8,543
Property, plant and equipment, net	15,645		15,796
Trademarks	21,663		21,663
Goodwill	38,539		38,523
Other intangible assets, net	785		897
Other non-current assets	3,420		3,182
Notes payable - current	378		466
Other current liabilities	62,380		22,065
Notes payable - long term	283		334
Other long-term liabilities	9,420		9,614
Members' equity	105,747		134,140

28

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Revenues	$	113,647		$	97,955	$	188,184		$	169,130
Costs and expenses	100,093			88,568		173,707			157,794
Depreciation expense	985			831		1,958			1,646
Amortization expense	55			61		111			121
Other income	261			490		403			1,232
Interest (income) expense, net	(8		)	9		(8		)	32
Income tax expense	301			269		242			323
Net income	$	12,482		$	8,707	$	12,577		$	10,446

Douglas Elliman Realty is in discussions with Prudential to redeem the approximate 20% equity interest owned by a former affiliate of Prudential.  The redemption price for such equity interest is to be determined through an appraisal process in accordance with the terms of Douglas Elliman Realty's Limited Liability Company Operating Agreement. Upon completion of the redemption, Vector will own more than 50% of Douglas Elliman Realty and will consolidate Douglas Elliman Realty accordingly.

Chelsea Eleven.  New Valley recorded equity income of $451 and $2,118 for the three and six months ended June 30, 2012, respectively, and received net distributions of $8,439 for the six months ended June 30, 2012, related to New Valley Chelsea. New Valley had no exposure to loss as a result of its investment in Chelsea as of June 30, 2013.

Hotel Taiwana. New Valley contributed additional capital of $567 in February 2013 and $3,088 in April 2013, along with contributions of additional capital by the other investment partners of Hill Street Partners LLP ("Hill"). New Valley's investment percentage did not change from year end. Hill used the contributions to purchase the remaining interest in Hotel Taiwana.

101 Murray Street. In May 2013, a subsidiary of New Valley acquired a 25% interest in a joint venture, which had the rights to acquire a 15-story building on a 31,000 square-foot lot in the Tribeca neighborhood of Manhattan, NY. The former owner will vacate the building by July 2014. The joint venture plans to build a 150-unit, luxury condominium building on the building's site. Development will begin in 2014 and is expected to be completed in September 2017.

In July 2013, the joint venture closed on the acquisition of the property. New Valley had invested $11,981 in the joint venture as of June 30, 2013 in the form of capital contributions and a loan bearing interest at 12% per annum, compounded quarterly, to the joint venture partner. New Valley contributed another $7,275 in July 2013 in the form of capital contributions and a loan, bearing interest at 12% per annum, compounded quarterly, to the same joint venture partner.

Park Lane Hotel. In July 2013, a subsidiary of New Valley acquired an 18% interest in a joint venture that has agreed to acquire the Park Lane Hotel, which is presently a 47-story, 605-key independent hotel owned and operated by the Helmsley Family Trust and Estate. The joint venture is developing plans for a hotel and luxury residential condominiums.  The development is estimated to take approximately 30 months from commencement of construction.

29

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Consolidated real estate investments:

The components of “Investments in consolidated real estate businesses, net” were as follows:

	June 30, 2013		December 31, 2012
Escena, net	$	13,139	$	13,295
Indian Creek	10,061		—
Investment in consolidated real estate businesses, net	$	23,200	$	13,295

Investment in Escena. The components of the Company's investment in Escena are as follows:

	June 30, 2013			December 31, 2012
Land and land improvements	$	11,430		$	11,430
Building and building improvements	1,530			1,530
Other	1,403			1,374
	14,363			14,334
Less accumulated depreciation	(1,224		)	(1,039		)
	$	13,139		$	13,295

The Company recorded an operating loss of $307 and $123 for the three months ended June 30, 2013 and 2012, respectively, from Escena. The Company recorded operating income of $76 and $487 for the six months ended June 30, 2013 and 2012, respectively, from Escena.

Investment in Indian Creek. In March 2013, New Valley invested $7,616 for an approximate 80% interest in Timbo LLC ("Indian Creek") which owns a residential real estate conversion project located on Indian Creek, Florida. As a result of the 80% ownership interest, the consolidated financial statements of the Company include the balances of Indian Creek which included land and building of approximately $9,719, a line of credit of $3,570, equity interest of $4,576 and a minority interest of $1,147 as of June 30, 2013. New Valley received a distribution of $3,080 during the six months ended June 30, 2013, while $767 is payable to the minority interest shareholder as of June 30, 2013.

In May 2013, Indian Creek entered into a $8,400 line of credit for a construction loan, that bears interest at the Overnight LIBOR rate plus 250 basis points, floating, per annum. A total of $3,570 was outstanding under the facility and has been classified as a component of Notes payable on the Company's Condensed Consolidated Balance Sheet as of June 30, 2013.

30

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

9. INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company's recurring financial assets and liabilities subject to fair value measurements are as follows:

	Fair Value Measurements as of June 30, 2013
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	219,533	$	219,533	$	—	$	—
Certificates of deposit	2,234		—		2,234		—
Bonds	7,577		7,577		—		—
Investment securities available for sale							—
Equity securities	86,691		79,947		6,744		—
Fixed income securities
U.S. Government securities	10,094		—		10,094		—
Corporate securities	30,031		—		30,031		—
U.S. mortgage backed securities	589		—		589		—
Commercial mortgage-backed securities	5,886		—		5,886		—
U.S. asset backed securities	850		—		850		—
Total fixed income securities	47,450		—		47,450		—
Warrants	806		—		—		806
Total	$	364,291	$	307,057	$	56,428	$	806
Liabilities:
Fair value of derivatives embedded within convertible debt	166,629		—		—		166,629
Total	$	166,629	$	—	$	—	$	166,629

31

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Fair Value Measurements as of December 31, 2012
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	372,718	$	372,718	$	—	$	—
Certificates of deposit	2,240		—		2,240		—
Bonds	6,306		6,306		—		—
Investment securities available for sale:
Equity securities	69,984		69,107		877		—
Warrants	769		—		—		769
Total	$	452,017	$	448,131	$	3,117	$	769
Liabilities:
Fair value of derivatives embedded within convertible debt	172,128		—		—		172,128
Total	$	172,128	$	—	$	—	$	172,128

The fair value of the Level 2 certificates of deposit are based on prices posted by the financial institutions. The fair value of investment securities available for sale included in Level 1 are based on quoted market prices from various stock exchanges. The Level 2 investment securities available for sale are equity securities based on quoted market prices of securities that are thinly traded and debt securities based on evaluated prices using observable, market-based inputs.

The fair value of derivatives embedded within convertible debt was derived using a valuation model and have been classified as Level 3. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads based upon the implied debt rate of the 7.5% Convertible Notes to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt are presented on the Condensed Consolidated Statements of Operations.

The value of the embedded derivatives is contingent on changes in implied interest rates of the convertible debt, the Company's stock price, stock volatility as well as projections of future cash and stock dividends over the term of the debt.  The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on the Company's 2019 Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by the Company's stock price, convertible bond trading price, risk free interest rates and stock volatility. 

The Company recognized income of $5,499 and charges of $27,060 for the six months ended June 30, 2013 and 2012, respectively.

The fair value of the warrants was derived using the Black-Scholes model and has been classified as Level 3. The assumptions used under the Black-Scholes model in computing the fair value of the warrants are based on contractual term of the warrants, volatility of the underlying stock based on the historical quoted prices of the underlying stock, assumed future dividend payments and a risk-free rate of return.

32

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at June 30, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	806	Option model	Stock price	$	1.54
				Exercise price	$	1.68
				Term (in years)	4.4
				Volatility	95.19		%
				Dividend rate	—
				Risk-free return	0.64		%
Fair value of derivatives embedded within convertible debt	$	166,629	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.22
				Convertible trading price	117.94		%
				Volatility	18		%
				Implied credit spread	8% - 9% (8.5%)

33

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2012:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2012		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	769	Option model	Stock price	$	1.40
				Exercise price	$	1.68
				Term (in years)	3.8
				Volatility	76.87		%
				Dividend rate	—
				Risk-free return	0.50		%
Fair value of derivatives embedded within convertible debt	$	172,128	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	14.87
				Convertible trading price	109.00		%
				Volatility	18		%
				Implied credit spread	10% - 11% (10.5%)

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of June 30, 2013 and December 31, 2012, respectively.

10. SEGMENT INFORMATION

The Company's significant business segments for the three and six months ended June 30, 2013 and 2012 were Tobacco and Real Estate.  The Tobacco segment consists of the manufacture and sale of cigarettes.  The Real Estate segment includes the Company's investment in Escena, Indian Creek and investments in non-consolidated real estate businesses. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

34

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Financial information for the Company's operations before taxes for the three and six months ended June 30, 2013 and 2012 follows:

					Real			Corporate
	Tobacco				Estate			and Other			Total
Three months ended June 30, 2013
Revenues	$	249,120			$	—		$	—		$	249,120
Operating income (loss)	48,294		(1	)	(407		)	(3,647		)	44,240
Equity income from non-consolidated real estate businesses	—				6,804			—			6,804
Depreciation and amortization	2,368				152			117			2,637
Three months ended June 30, 2012
Revenues	$	276,594			$	—		$	—		$	276,594
Operating income (loss)	44,590				(249		)	(3,413		)	40,928
Equity income from non-consolidated real estate businesses	—				5,232			—			5,232
Depreciation and amortization	2,383				88			68			2,539
Six months ended June 30, 2013
Revenues	$	489,522			$	—		$	—		$	489,522
Operating income (loss)	95,454		(2	)	(321		)	(7,797		)	87,336
Equity income from non-consolidated real estate businesses	—				7,285			—			7,285
Depreciation and amortization	4,753				280			200			5,233
Capital expenditures	3,319				429			2,247			5,995
Six months ended June 30, 2012
Revenues	$	534,200			$	—		$	—		$	534,200
Operating income (loss)	82,105				272			(8,003		)	74,374
Equity income from non-consolidated real estate businesses	—				8,095			—			8,095
Depreciation and amortization	4,878				173			259			5,310
Capital expenditures	6,334				99			961			7,394

⁽¹⁾ Operating income includes $1,345 of income from a NPM Settlement.

⁽²⁾ Operating income includes $6,947 of income from NPM Settlements.

35

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

11. LADENBURG THALMANN FINANCIAL SERVICES INC.

Vector presently beneficially owns approximately 8.1% of Ladenburg Thalmann Financial Services Inc. ("LTS"). Vector lent $15,000 to LTS in November 2011. In May and June 2013, LTS paid Vector $8,433 of principal plus related interest on the loan. In connection with the principal reduction, the Company recognized $552 of interest income related to the acceleration of the amortization of note discount. As of June 30, 2013, the outstanding principal balance on the loan to LTS was $6,567.

On May 22, 2013, Vector purchased 240,000 shares of LTS 8% Series A Cumulative Redeemable Preferred Stock (Liquidation Preference $25.00 Per Share) ("LTS-A") for $6,000. LTS will pay a monthly cumulative dividend of 8% on the LTS-A on a monthly basis. LTS, at its option, may redeem any or all of the LTS-A at $25.00 per share plus any accumulated and unpaid dividends on or after May 24, 2018. As of June 30, 2013, the LTS-A investment was included in "Investment securities available for sale" and had a carrying value of $6,007 in Vector's Condensed Consolidated Balance Sheet..

12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to Securities and Exchange Commission Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered”. Each of the subsidiary guarantors are 100% owned, directly or indirectly, by the Company, and all guarantees are joint and several and subject to certain automatic release provisions. Relief from the financial statement requirements under Rule 3-10 is being provided because the Company's guarantee release provisions are considered customary pursuant to Section 2510.5 of the SEC Division of Corporation Finance Financial Reporting Manual. The Company's investments in its consolidated subsidiaries are presented under the equity method of accounting.

The indenture of the 7.75% Senior Secured Notes contains similar guarantees and covenants to those of the 11% Senior Secured Notes, except the indenture has covenants that restrict the payment of dividends by the Company if the Company's consolidated earnings before interest, taxes, depreciation and amortization, as defined in the indenture, for the most recently ended four full quarters is less than $75,000 and the indenture also restricts the incurrence of debt if the Company's Leverage Ratio and its Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively.

36

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	273,219		$	7,779	$	715	$	—		$	281,713
Investment securities available for sale	83,019			51,122		—		—			134,141
Accounts receivable - trade, net	—			12,257		238		—			12,495
Intercompany receivables	879			—		—		(879		)	—
Inventories	—			96,761		—		—			96,761
Deferred income taxes	28,804			3,213		—		—			32,017
Income taxes receivable, net	44,764			—		—		(28,133		)	16,631
Restricted assets	—			1,241		—		—			1,241
Other current assets	479			4,548		193		—			5,220
Total current assets	431,164			176,921		1,146		(29,012		)	580,219
Property, plant and equipment, net	4,115			53,408		544		—			58,067
Investment in consolidated real estate businesses, net	—			—		23,200		—			23,200
Long-term investments accounted for at cost	20,540			—		752		—			21,292
Long-term investments accounted for under the equity method	6,671			—		—		—			6,671
Investments in non-consolidated real estate businesses	—			—		142,878		—			142,878
Investments in consolidated subsidiaries	265,105			—		—		(265,105		)	—
Restricted assets	1,892			10,365		31		—			12,288
Deferred income taxes	39,627			8,643		5,870		—			54,140
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			13,787		—		—			13,787
Other assets	39,568			9,920		2		—			49,490
Total assets	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	33,752	$	154	$	—		$	33,906
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	782			5,025		113		—			5,920
Intercompany payables	—			493		386		(879		)	—
Accrued promotional expenses	—			17,618		—		—			17,618
Income taxes payable	—			449		34,107		(28,133		)	6,423
Accrued excise and payroll taxes payable, net	—			1,208		—		—			1,208
Litigation accruals and current payments due under the Master Settlement Agreement	—			59,966		—		—			59,966
Deferred income taxes	21,328			10,702		—		—			32,030
Accrued interest	22,398			—		—		—			22,398
Other current liabilities	3,872			7,917		1,291		—			13,080
Total current liabilities	48,380			139,954		36,051		(29,012		)	195,373
Notes payable, long-term debt and other obligations, less current portion	623,215			11,567		3,570		—			638,352
Fair value of derivatives embedded within convertible debt	166,629			—		—		—			166,629
Non-current employee benefits	26,436			19,941		—		—			46,377
Deferred income taxes	72,616			35,306		4,522		—			112,444
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	908			37,504		1,458		—			39,870
Total liabilities	938,184			244,272		45,601		(29,012		)	1,199,045
Commitments and contingencies
Stockholders' deficiency	(129,502		)	136,283		128,822		(265,105		)	(129,502		)
Total liabilities and stockholders' deficiency	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543

37

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2012
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	401,344		$	3,776	$	735	$	—		$	405,855
Investment securities available for sale	35,330			34,654		—		—			69,984
Accounts receivable - trade, net	—			11,183		64		—			11,247
Intercompany receivables	354			—		—		(354		)	—
Inventories	—			100,392		—		—			100,392
Deferred income taxes	33,238			3,371		—		—			36,609
Income taxes receivable, net	33,302			—		—		(26,523		)	6,779
Restricted assets	—			2,469		—		—			2,469
Other current assets	665			4,848		208		—			5,721
Total current assets	504,233			160,693		1,007		(26,877		)	639,056
Property, plant and equipment, net	2,104			54,810		239		—			57,153
Investment in consolidated real estate businesses, net	—			—		13,295		—			13,295
Long-term investments accounted for at cost	15,540			—		827		—			16,367
Long-term investments accounted for under the equity method	6,432			—		—		—			6,432
Investments in non- consolidated real estate businesses	—			—		119,219		—			119,219
Investments in consolidated subsidiaries	210,525			—		—		(210,525		)	—
Restricted assets	1,898			7,863		31		—			9,792
Deferred income taxes	38,077			5,669		5,396		—			49,142
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			12,870		—		—			12,870
Other assets	39,534			16,144		216		—			55,894
Total assets	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	36,617	$	161	$	—		$	36,778
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	661			5,173		265		—			6,099
Intercompany payables	—			64		290		(354		)	—
Accrued promotional expenses	—			18,730		—		—			18,730
Income taxes payable	—			1,445		31,347		(26,523		)	6,269
Accrued excise and payroll taxes payable, net	—			20,419		—		—			20,419
Litigation accruals and current payments due under the Master Settlement Agreement	—			34,440		—		—			34,440
Deferred income taxes	23,304			3,995		—		—			27,299
Accrued interest	25,410			—		—		—			25,410
Other current liabilities	5,545			9,658		1,688		—			16,891
Total current liabilities	54,920			133,365		33,751		(26,877		)	195,159
Notes payable, long-term debt and other obligations, less current portion	572,023			14,860		63		—			586,946
Fair value of derivatives embedded within convertible debt	172,128			—		—		—			172,128
Non-current employee benefits	25,599			20,261		—		—			45,860
Deferred income taxes	71,777			33,793		3,962		—			109,532
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,148			54,506		704		—			56,358
Total liabilities	897,595			256,785		38,480		(26,877		)	1,165,983
Commitments and contingencies
Stockholders' deficiency	(79,252		)	108,775		101,750		(210,525		)	(79,252		)
Total liabilities and stockholders' deficiency	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731

38

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	249,120		$	—		$	—		$	249,120
Expenses:
Cost of goods sold	—			180,430			—			—			180,430
Operating, selling, administrative and general expenses	5,506			18,455			489			—			24,450
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(5,506		)	47,858			(489		)	2,377			44,240
Other income (expenses):
Interest expense	(31,723		)	(360		)	(3		)	—			(32,086		)
Change in fair value of derivatives embedded within convertible debt	2,450			—			—			—			2,450
Equity income from non-consolidated real estate businesses	—			—			6,804			—			6,804
Equity income on long-term investments	846			—			—			—			846
Loss on investment securities available for sale	(197		)	—			—			—			(197		)
Equity income in consolidated subsidiaries	32,277			—			—			(32,277		)	—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	1,245			150			76			—			1,471
Income before provision for income taxes	1,769			47,648			6,388			(32,277		)	23,528
Income tax benefit (expense)	11,742			(19,134		)	(2,625		)	—			(10,017		)
Net income	13,511			28,514			3,763			(32,277		)	13,511
Comprehensive income	$	14,633		$	27,179		$	3,763		$	(30,942	)	$	14,633

39

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	276,594		$	—		$	—		$	276,594
Expenses:
Cost of goods sold	—			211,752			—			—			211,752
Operating, selling, administrative and general expenses	5,223			18,419			272			—			23,914
Management fee expense	—			2,290			—			(2,290		)	—
Operating (loss) income	(5,223		)	44,133			(272		)	2,290			40,928
Other income (expenses):
Interest expense	(25,497		)	(1,006		)	(6		)	—			(26,509		)
Change in fair value of derivatives embedded within convertible debt	(6,003		)	—			—			—			(6,003		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			5,232			—			5,232
Equity loss on long-term investments	(1,215		)	—			—			—			(1,215		)
Equity income in consolidated subsidiaries	28,924			—			—			(28,924		)	—
Management fee income	2,290			—			—			(2,290		)	—
Other, net	456			(8		)	135			—			583
(Loss) income before provision for income taxes	(14,156		)	43,119			5,089			(28,924		)	5,128
Income tax benefit (expense)	18,051			(16,973		)	(2,311		)	—			(1,233		)
Net income	3,895			26,146			2,778			(28,924		)	3,895
Comprehensive income	$	1,137		$	26,585		$	2,778		$	(29,363	)	$	1,137

40

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	489,522		$	—		$	—		$	489,522
Expenses:
Cost of goods sold	—			353,386			—			—			353,386
Operating, selling, administrative and general expenses	11,382			36,949			469			—			48,800
Management fee expense	—			4,754			—			(4,754		)	—
Operating (loss) income	(11,382		)	94,433			(469		)	4,754			87,336
Other income (expenses):
Interest expense	(64,683		)	(772		)	(7		)	—			(65,462		)
Change in fair value of derivatives embedded within convertible debt	5,499			—			—			—			5,499
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from non-consolidated real estate businesses	—			—			7,285			—			7,285
Equity income on long-term investments	823			—			—			—			823
(Loss) gain on investment securities available for sale	(197		)	5,406			—			—			5,209
Equity income in consolidated subsidiaries	63,565			—			—			(63,565		)	—
Management fee income	4,754			—			—			(4,754		)	—
Other, net	1,947			205			128			—			2,280
(Loss) income before provision for income taxes	(21,132		)	99,272			6,937			(63,565		)	21,512
Income tax benefit (expense)	32,962			(39,791		)	(2,853		)	—			(9,682		)
Net income	11,830			59,481			4,084			(63,565		)	11,830
Comprehensive income	$	18,866		$	61,624		$	4,084		$	(65,708	)	$	18,866

41

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	534,200		$	—		$	—		$	534,200
Expenses:
Cost of goods sold	—			411,933			—			—			411,933
Operating, selling, administrative and general expenses	11,484			36,623			(214		)	—			47,893
Management fee expense	—			4,581			—			(4,581		)	—
Operating (loss) income	(11,484		)	81,063			214			4,581			74,374
Other income (expenses):
Interest expense	(50,406		)	(2,342		)	(13		)	—			(52,761		)
Change in fair value of derivatives embedded within convertible debt	(27,060		)	—			—			—			(27,060		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			8,095			—			8,095
Equity loss on long-term investments	(1,329		)	—			—			—			(1,329		)
Equity income in consolidated subsidiaries	53,542			—			—			(53,542		)	—
Management fee income	4,581			—			—			(4,581		)	—
Other, net	361			19			135			—			515
(Loss) income before provision for income taxes	(39,683		)	78,740			8,431			(53,542		)	(6,054		)
Income tax benefit (expense)	35,888			(30,206		)	(3,423		)	—			2,259
Net (loss) income	(3,795		)	48,534			5,008			(53,542		)	(3,795		)
Comprehensive (loss) income	$	(10,896	)	$	48,349		$	5,008		$	(53,357	)	$	(10,896	)

42

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	5,204		$	57,823		$	2,187		$	(60,024	)	$	5,190
Cash flows from investing activities:
Sale of investment securities	36,533			6,582			—			—			43,115
Purchase of investment securities	(79,368		)	(11,000		)	—			—			(90,368		)
Proceeds from sale or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(19,048		)	—			(19,048		)
Investments in consolidated real estate businesses	—			—			(7,657		)				(7,657		)
Decrease (increase) in cash surrender value of life insurance policies	79			(382		)	—						(303		)
Decrease (increase) in restricted assets	6			(1,274		)	—						(1,268		)
Investments in subsidiaries	(43,584		)	—			—			43,584			—
Proceeds from sale of fixed assets	—			13			—						13
Capital expenditures	(2,247		)	(3,319		)	(429		)				(5,995		)
Repayments of notes receivable	8,433			—			—			—			8,433
Net cash used in investing activities	(85,148		)	(9,380		)	(27,059		)	43,584			(78,003		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			—			3,080						453,080
Deferred financing costs	(11,663		)	—			—						(11,663		)
Repayments of debt	(415,000		)	(3,763		)	(70		)				(418,833		)
Borrowings under revolver	—			474,493			—						474,493
Repayments on revolver	—			(476,888		)	—						(476,888		)
Capital contributions received	—			12,300			31,284			(43,584		)	—
Intercompany dividends paid	—			(50,582		)	(9,442		)	60,024			—
Dividends and distributions on common stock	(71,518		)	—			—						(71,518		)
Net cash (used in) provided by financing activities	(48,181		)	(44,440		)	24,852			16,440			(51,329		)
Net (decrease) increase in cash and cash equivalents	(128,125		)	4,003			(20		)	—			(124,142		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	273,219		$	7,779		$	715		$	—		$	281,713

43

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	22,900		$	74,473		$	5,557		$	(45,101	)	$	57,829
Cash flows from investing activities:
Purchase of investment securities	—			(1,148		)	—			—			(1,148		)
Proceeds from sale of or liquidation of long-term investments	—			—			72			—			72
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(9,667		)	—			(9,667		)
Distributions from non-consolidated real estate businesses	—			—			6,221			—			6,221
Increase in cash surrender value of life insurance policies	(425		)	(195		)	—			—			(620		)
Decrease (increase) in restricted assets	268			(321		)	—			—			(53		)
Issuance of notes receivable	(234		)	—			—			—			(234		)
Proceeds from sale of fixed assets	393			11			—			—			404
Investments in subsidiaries	(1,008		)	—			—			1,008			—
Capital expenditures	(961		)	(6,334		)	(99		)	—			(7,394		)
Net cash used in investing activities	(6,967		)	(7,987		)	(3,473		)	1,008			(17,419		)
Cash flows from financing activities:
Proceeds from debt issuance	—			14,018			—			—			14,018
Deferred financing costs	—			(315		)	—			—			(315		)
Repayments of debt	—			(13,428		)	(65		)	—			(13,493		)
Borrowings under revolver	—			525,350			—			—			525,350
Repayments on revolver	—			(532,082		)	—			—			(532,082		)
Capital contributions received	—			950			58			(1,008		)	—
Intercompany dividends paid	—			(43,500		)	(1,601		)	45,101			—
Dividends and distributions on common stock	(66,112		)	—			—			—			(66,112		)
Proceeds from exercise of Vector options	45			—			—			—			45
Tax benefits from exercise of Vector options	4			—			—			—			4
Net cash used in financing activities	(66,063		)	(49,007		)	(1,608		)	44,093			(72,585		)
Net (decrease) increase in cash and cash equivalents	(50,130		)	17,479			476			—			(32,175		)
Cash and cash equivalents, beginning of period	238,262			2,488			173			—			240,923
Cash and cash equivalents, end of period	$	188,132		$	19,967		$	649		$	—		$	208,748

44

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Overview

We are a holding company and are engaged principally in:

• the manufacture and sale of cigarettes in the United States through our Liggett Group LLC and Vector Tobacco Inc. subsidiaries, and

• the real estate business through our New Valley LLC subsidiary, which is seeking to acquire additional operating companies and real estate properties. New Valley owns 50% of Douglas Elliman Realty, LLC, which operates the largest residential brokerage company in the New York metropolitan area.

All of our tobacco operation's unit sales volume in 2012 and for the first six months of 2013 was in the discount segment, which management believes has been the primary growth segment in the industry for more than a decade. The significant discounting of premium cigarettes in recent years has led to brands, such as EVE, that were traditionally considered premium brands to become more appropriately categorized as discount, following list price reductions.

Our tobacco subsidiaries' cigarettes are produced in approximately 117 combinations of length, style and packaging. Liggett's current brand portfolio includes:

• PYRAMID - the industry's first deep discount product with a brand identity re-launched in the second quarter of 2009,

• GRAND PRIX - re-launched as a national brand in 2005,

• LIGGETT SELECT - a leading brand in the deep discount category,

• EVE - a leading brand of 120 millimeter cigarettes in the branded discount category,

• EAGLE 20's - relaunched as a deep discount brand in January 2013, and

• USA and various Partner Brands and private label brands.

In 1999, Liggett introduced LIGGETT SELECT, one of the leading brands in the deep discount category. LIGGETT SELECT's unit volume was 6.2% for the six months ended June 30, 2013 and 7.0% of Liggett's unit volume for the year ended December 31, 2012. In September 2005, Liggett repositioned GRAND PRIX to distributors and retailers nationwide. GRAND PRIX's unit volume was 8.2% of Liggett's unit volume for the six months ended June 30, 2013 and 9.6% for the year ended December 31, 2012. In April 2009, Liggett repositioned PYRAMID as a box-only brand with a new low price to specifically compete with brands which are priced at the lowest level of the deep discount segment. PYRAMID is now the largest seller in Liggett's family of brands with 66.8% of Liggett's unit volume for the six months ended June 30, 2013 and 62.7% for the year ended December 31, 2012. In January 2013, Liggett repackaged and relaunched EAGLE 20's to distributors and retailers. EAGLE 20's is marketed to compete with brands positioned in the deep discount segment.

Under the Master Settlement Agreement ("MSA") reached in November 1998 with 46 states and various territories, the three largest cigarette manufacturers must make settlement payments to the states and territories based on how many cigarettes they sell annually. Liggett, however, is not required to make any payments unless its market share exceeds approximately 1.65% of the U.S. cigarette market. Additionally, Vector Tobacco has no payment obligation unless its market share exceeds approximately 0.28% of the U.S. market. Liggett’s and Vector Tobacco’s payments under the MSA are based on each company’s incremental market share above the minimum threshold applicable to such company. We believe that our tobacco subsidiaries have gained a sustainable cost advantage over their competitors as a result of the settlement.

The discount segment is a challenging marketplace, with consumers having less brand loyalty and placing greater emphasis on price. Liggett’s competition is now divided into two segments. The first segment is made up of the three largest manufacturers of cigarettes in the United States, Philip Morris USA Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco Company. The three largest manufacturers, while primarily premium cigarette based companies, also produce and sell discount cigarettes. The second segment of competition is comprised of a group of smaller manufacturers and importers, most of which sell deep discount cigarettes. Our largest competitor in this segment is Commonwealth Brands, Inc. (a wholly owned subsidiary of Imperial Tobacco PLC).

45

Recent Developments

7.75% Senior Secured Notes due 2021. In February 2013, we issued $450,000 of our 7.75% senior secured notes due 2021 in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. In June 2013, we completed an offer to exchange the 7.75% senior secured notes issued in February 2013 for an equal amount of newly issued 7.75% senior secured notes due 2021. The new 7.75% senior secured notes have substantially the same terms as the original notes, except that the new 7.75% senior secured notes have been registered under the Securities Act.

The 7.75% senior secured notes pay interest on a semi-annual basis at a rate of 7.75% per year and mature on February 15, 2021. We may redeem some or all of the 7.75% senior secured notes at any time prior to February 15, 2016 at a make-whole redemption price. On or after February 15, 2016 we may redeem some or all of the 7.75% senior secured notes at a premium that will decrease over time, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date.

The 7.75% senior secured notes are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of our 100% owned domestic subsidiaries that are engaged in the conduct of our cigarette businesses. In addition, some of the guarantees are collateralized by second priority or first priority security interests in certain collateral of some of the subsidiary guarantors, including their common stock, pursuant to security and pledge agreements. The indenture contains covenants that restrict the payment of dividends if our consolidated earnings before interest, taxes, depreciation and amortization, as defined in the indenture, for the most recently ended four full quarters is less than $75,000. The indenture also restricts the incurrence of debt if our Leverage Ratio and our Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively.

The aggregate net proceeds from the issuance of the 7.75% senior secured notes were approximately $438,250 after deducting offering expenses. We used the net proceeds of the issuance for the cash tender offer described below and the redemption price for any existing 11% senior secured notes that were not tendered, plus accrued and unpaid interest plus any related fees and expenses.

Tender Offer. On January 29, 2013, we announced we were commencing a cash tender offer with respect to any and all of the outstanding $415,000 of our 11% senior secured notes due 2015. We retired $336,315 of the 11% senior secured notes at a premium of 104.292%, plus accrued and unpaid interest, on February 12, 2013. The remaining $78,685 of the 11% senior secured notes were called and were retired on March 14, 2013 at a redemption price of 103.667% plus accrued and unpaid interest. We recorded a loss on the extinguishment of the debt of $21,458 for the six months ended June 30, 2013, which included $17,820 of premium and tender offer costs and non-cash interest expense of $3,638 related to the write-off of net unamortized debt discount and deferred finance costs.

Prudential Franchise Agreements. Douglas Elliman Realty is in discussions with Prudential related to certain matters in connection with the franchise agreements, and Douglas Elliman Realty has elected to cease operating as a Prudential franchisee. Douglas Elliman Realty is seeking a resolution of these matters. The franchise agreements expired on March 13, 2013. As a result of the termination or expiration of the franchise agreements, in accordance with the terms of the Limited Liability Company Operating Agreement, Douglas Elliman Realty is required to redeem the approximate 20% equity interest owned by a former affiliate of Prudential. The redemption price for such equity interest is to be determined through an appraisal process in accordance with the terms of Douglas Elliman Realty's Limited Liability Company Operating Agreement.

Investment in Indian Creek. In March 2013, New Valley invested $7,616 for an approximate 80% interest in Timbo LLC ("Indian Creek") which owns a residential real estate conversion project located on Indian Creek, Florida. As a result of the 80% ownership interest, the consolidated financial statements of the Company include Indian Creek's activities.

Hotel Taiwana. New Valley contributed additional capital of $567 in February 2013 and $3,088 in April 2013, along with contributions of additional capital by the other investment partners of Hill Street Partners LLP ("Hill"). New Valley's investment percentage did not change from year end. Hill used the contributions to purchase the remaining interest in Hotel Taiwana in June 2013.

101 Murray Street. In May 2013, a subsidiary of New Valley acquired a 25% interest in a joint venture, which had the rights to acquire a 15-story building on a 31,000 square-foot lot in the Tribeca neighborhood of Manhattan, NY. The former owner will vacate the building by July 2014 and the building will be razed. The joint venture plans to build a 150-unit, luxury condominium building on the building's site. Development will begin in 2014 and is expected to be completed in September 2017.

In July 2013, the joint venture closed on the acquisition of the property. New Valley had invested $11,981 in the joint venture as of June 30, 2013 in the form of capital contributions and a loan bearing interest at 12% per annum, compounded quarterly, to the joint venture partner. New Valley contributed another $7,275 in July 2013 in the form of capital contributions and a loan, bearing interest at 12% per annum, compounded quarterly, to the same joint venture partner.

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Park Lane Hotel. In July 2013, a subsidiary of New Valley acquired an 18% interest in a joint venture that has agreed to acquire the Park Lane Hotel, which is presently a 47-story, 605-key independent hotel owned and operated by the Helmsley Family Trust and Estate. The joint venture is developing plans for a hotel and luxury residential condominiums.  The development is estimated to take approximately 30 months from commencement of construction.

NPM Adjustment.  In March 2006, an economic consulting firm selected pursuant to the MSA determined that the MSA was a “significant factor contributing to” the loss of market share of Participating Manufacturers, to non-participating manufacturers, for 2003. This is known as the “NPM Adjustment.” Effective December 17, 2012, the Participating Manufacturers entered into a “term sheet” with 20 Settling States setting out terms for settlement of the NPM Adjustment for 2003 through 2012 and addressing the NPM Adjustment mechanism for those states for future years. Certain non-signatory states objected to the settlement. In March 2013, the arbitration panel entered a Stipulated Partial Settlement and Award which, among other things, overrules the objections of the non-signatory states and directed the independent auditor to implement the terms of the term sheet effective with the April 15, 2013 MSA payments. In May 2013, two additional states joined the settlement. Several non-signatory states are attempting to vacate the settlement award by filing state court actions. Although certain terms of the settlement were implemented by the independent auditor on April 15, 2013, no assurance can be given as to the ultimate outcome of the non-signatory states' challenges.

As a result of the settlement, in the first quarter of 2013 Liggett and Vector Tobacco recognized income of $5,602. Following the additional two states joining the settlement in May 2013, Liggett and Vector Tobacco recognized an additional $1,345 of income in the second quarter of 2013. The remaining NPM Adjustment accrual of $27,600 at June 30, 2013 relates to the disputed amounts Liggett and Vector Tobacco have withheld from the non-signatory states for 2004 through 2010. Approximately $16,600 remains in the disputed payments accounts relating to the dispute with these non-signatory states.

Recent Developments in Smoking-Related Litigation

The cigarette industry continues to be challenged on numerous fronts. New cases continue to be commenced against Liggett and other cigarette manufacturers. Liggett could be subjected to substantial liabilities and bonding requirements from litigation relating to cigarette products. Adverse litigation outcomes could have a negative impact on our ability to operate due to their impact on cash flows. We and our Liggett subsidiary, as well as the entire cigarette industry, continue to be challenged on numerous fronts, particularly with respect to the Engle progeny cases in Florida. New cases continue to be commenced against Liggett and other cigarette manufacturers. It is likely that similar legal actions, proceedings and claims will continue to be filed against Liggett. Punitive damages, often in amounts ranging into the billions of dollars, are specifically pled in certain cases, in addition to compensatory and other damages. It is possible that there could be adverse developments in pending cases including the certification of additional class actions. An unfavorable outcome or settlement of pending tobacco-related litigation could encourage the commencement of additional litigation. In addition, an unfavorable outcome in any tobacco-related litigation could have a material adverse effect on our consolidated financial position, results of operations or cash flows. Liggett could face difficulties in obtaining a bond to stay execution of a judgment pending appeal.

As of June 30, 2013, there were 4,300Engle progeny cases, 63 individual product liability lawsuits, four purported class actions and one healthcare cost recovery action pending in the United States in which Liggett or us, or both, were named as a defendant. To date, adverse verdicts have been entered against Liggett in tenEngle progeny cases.

Engle Progeny Cases.  In 2000, a jury in Engle v. R.J. Reynolds Tobacco Co. rendered a $145,000,000 punitive damages verdict in favor of a “Florida Class” against certain cigarette manufacturers, including Liggett. Pursuant to the Florida Supreme Court's July 2006 ruling in Engle, which decertified the class on a prospective basis, and affirmed the appellate court's reversal of the punitive damages award, former class members had one year from January 11, 2007 in which to file individual lawsuits. In addition, some individuals who filed suit prior to January 11, 2007, and who claim they meet the conditions in Engle, are attempting to avail themselves of the Engle ruling. Lawsuits by individuals requesting the benefit of the Engle ruling, whether filed before or after the January 11, 2007 deadline, are referred to as the “Engle progeny cases.” Liggett and us are currently named in 4,300Engle progeny cases in both federal (1,257 cases) and state (3,043 cases) courts in Florida. Other cigarette manufacturers have also been named as defendants in these cases, although as a case proceeds, one or more defendants may ultimately be dismissed from the action. These cases include approximately 5,481 plaintiffs.

Liggett Only Cases.  There are currently five cases pending where Liggett is the only remaining tobacco company defendant. These cases consist of three Individual Actions and twoEngle progeny cases. Cases where Liggett is the only defendant could increase substantially as a result of the Engle progeny cases.

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Critical Accounting Policies

There are no material changes from the critical accounting policies set forth in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K, for the year ended December 31, 2012. Please refer to that section and the information below for disclosures regarding the critical accounting policies related to our business.

Results of Operations

The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report. The condensed consolidated financial statements include the accounts of VGR Holding, Liggett, Vector Tobacco, Liggett Vector Brands, New Valley and other less significant subsidiaries.

For purposes of this discussion and other consolidated financial reporting, our significant business segments for the six months ended June 30, 2013 and 2012 were Tobacco and Real Estate. The Tobacco segment consists of the manufacture and sale of cigarettes. The Real Estate segment includes our investments in consolidated and non-consolidated real estate businesses.

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2013				2012			2013				2012
Revenues:
Tobacco	$	249,120			$	276,594		$	489,522			$	534,200
Operating income:
Tobacco	$	48,294		(1)	$	44,590		$	95,454		(2)	$	82,105
Real Estate	(407		)		(249		)	(321		)		272
Corporate and other	(3,647		)		(3,413		)	(7,797		)		(8,003		)
Total operating income	$	44,240			$	40,928		$	87,336			$	74,374

____________________

⁽¹⁾ Operating income includes $1,345 of income from a NPM Settlement.

⁽²⁾ Operating income includes $6,947 of income from NPM Settlements.

Three Months Ended June 30, 2013 Compared to Three Months ended June 30, 2012

Revenues. All of our revenues were from the Tobacco segment for the second quarter of 2013 and 2012. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $1.00 per carton in June 2012, $0.60 per carton in December 2012, and $0.60 per carton in June 2013.

All of our sales in 2013 and 2012 were in the discount category. For the three months ended June 30, 2013, revenues were $249,120 compared to $276,594 for the three months ended June 30, 2012. Revenues declined by 9.9% ($27,474) primarily due to a decline in unit sales volume of $39,131 (approximately 365.1 million units or 14.0%) offset by a favorable price variance of $11,657 primarily related to increases in price of the Company's core brands.

Cost of goods sold. Our cost of goods sold declined from $211,752 for the three months ended June 30, 2012 to $180,430 for the three months ended June 30, 2013 due to the 14.0% decline in unit sales volume . The major components of our cost of goods sold are federal excise taxes, expenses under the MSA, FDA legislation and tobacco buyout, which are variable costs based on the number of units sold, and tobacco and other manufacturing costs, which are fixed and variable costs. Federal excise taxes declined from $130,967 for the three months ended June 30, 2012 to $112,596 for the three months ended June 30, 2013 as a result of the decreased unit sales volume. Tobacco and other manufacturing costs were $29,177 and $33,019 for the three months ended June 30, 2013 and 2012, respectively. Expenses under the MSA were $27,171 and $36,151 for the three months ended June 30, 2013 and 2012, respectively. The 2013 MSA expenses were reduced by the $1,345 NPM settlement.

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Tobacco gross profit. Tobacco gross profit was $68,691 for the three months ended June 30, 2013 compared to $64,842 for the three months ended June 30, 2012. This represented an increase of $3,849 (5.9%) from the 2012 period. As a percentage of revenue (excluding federal excise taxes), Tobacco gross profit increased to 50.3% in the 2013 period (49.3% adjusting for the NPM settlement) compared to gross profit of 44.5% in the 2012 period due to higher prices.

Expenses. Operating, selling, general and administrative expenses were $24,450 for the three months ended June 30, 2013 compared to $23,914 for the same period last year, an increase of $536 (2.2%). Tobacco expenses were $20,396 for the three months ended June 30, 2013 compared to $20,252 for the same period in the prior year. The increase of $144 was primarily the result of an increased sales force in 2013 offset by lower tobacco product liability legal expenses and other litigation costs. Tobacco product liability legal expenses and other litigation costs were $1,953 and $2,069 for the three months ended June 30, 2013 and 2012, respectively. Expenses at the corporate level increased from $3,413 to $3,647.

Operating income. Operating income was $44,240 for the three months ended June 30, 2013 compared to $40,928 for the same period last year, an increase of $3,312 (8.1%). Tobacco segment operating income increased to $48,294 in 2013 from $44,590 in 2012 primarily due to higher prices in 2013 and the NPM settlement in 2013. The real estate segment operating loss was $407 and $249 for the three months ended June 30, 2013 and 2012, respectively, related primarily to Escena's operations.

Other income (expenses). Other expenses were$20,712 for the three months ended June 30, 2013 compared to expenses of $35,800 for the same period last year. For the three months ended June 30, 2013, other expenses primarily consisted of interest expense of $32,086. This was offset by equity income from non-consolidated real estate businesses of $6,804, income of $2,450 from changes in fair value of derivatives embedded within convertible debt, other income of $1,471 and equity income on long-term investments of $846. For the three months ended June 30, 2012, other expenses primarily consisted of interest expense of $26,509, accelerated interest expense related to the conversion of debt of $7,888 losses of $6,003 from changes in fair value of derivatives embedded within convertible debt and an equity loss on long-term investments of $1,215. This was offset by equity income from non-consolidated real estate businesses of $5,232 and interest and other income of $583.

The value of the embedded derivatives is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt, our stock price as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on our 7.5% Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by our stock price, convertible bond trading price, risk free interest rates and stock volatility.  We recognized income of $2,450 and charges of $6,003 for the three months ended June 30, 2013 and 2012, respectively.

Income before income taxes. Income before income taxes for the three months ended June 30, 2013 was $23,528 compared to $5,128 for the three months ended June 30, 2012.

Income tax expense. Income tax expense was $10,017 and $1,233 for the three months ended June 30, 2013 and 2012, respectively. Our provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual income before provision for income taxes in accordance with guidance on accounting for income taxes on interim periods. For the three months ended June 30, 2013, our income tax expense was increased by approximately $121 due primarily to the the accrual of an unrecognized tax benefit. For the three months ended June 30, 2012, our income tax expense was decreased by approximately $769 due primarily to the impact of the acceleration of interest expense related to the conversion of the Company's 3.875% Senior Convertible Debentures due 2026.

Six Months EndedJune 30, 2013 Compared to Six Months EndedJune 30, 2012

Revenues. All of our revenues were from the Tobacco segment for the second quarter of 2013 and 2012. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $1.00 per carton in June 2012, $0.60 per carton in December 2012, and $0.60 per carton in June 2013.

All of our sales in 2013 and 2012 were in the discount category. For the six months ended June 30, 2013, revenues were $489,522 compared to $534,200 for the six months ended June 30, 2012. Revenues declined by 8.4% ($44,678) primarily due to a decline unit sales volume of $69,916 (approximately $624 million units or 12.4%) offset by a favorable price variance of $25,238 primarily related to increases in price of the Company's core brands.

Cost of goods sold. Our cost of goods sold declined from $411,933 for the six months ended June 30, 2012 to $353,386 for the six months ended June 30, 2013 due to the 12.4% decline in unit sales volume . The major components of our cost of goods

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sold are federal excise taxes, expenses under the MSA, FDA legislation and tobacco buyout, which are variable costs based on the number of units sold, and tobacco and other manufacturing costs, which are fixed and variable costs. Federal excise taxes declined from $252,892 for the six months ended June 30, 2012 to $221,507 for the six months ended June 30, 2013 as a result of decreased unit sales volume. Tobacco and other manufacturing costs were $58,004 and $64,154 for the six months ended June 30, 2013 and 2012, respectively. Expenses under the MSA were $49,959 and $69,819 for the six months ended June 30, 2013 and 2012, respectively. The 2013 MSA expenses were reduced by the $6,947 NPM settlements.

Tobacco gross profit. Tobacco gross profit was $136,136 for the six months ended June 30, 2013 compared to $122,267 for the six months ended June 30, 2012. This represented an increase of $13,869 (11.3%) from the 2012 period. This increase was due primarily to higher prices and the $6,947 from the NPM settlements. As a percentage of revenues (excluding federal excise taxes), Tobacco gross profit increased to 50.8% in the 2013 period (48.2% adjusting for the NPM Settlements) compared to gross profit of 43.5% in the 2012 period due to higher prices and the NPM settlements.

Expenses. Operating, selling, general and administrative expenses were $48,800 for the six months ended June 30, 2013 compared to $47,893 for the same period last year, an increase of $907 (1.9%). Tobacco expenses were $40,682 for the six months ended June 30, 2013 compared to $40,162 for the same period in the prior year. The increase of $520 was primarily the result of an increased sales force in 2013 offset by lower tobacco product liability and legal expenses. Tobacco product liability legal expenses and other litigation costs were $3,562 and $4,030 for the six months ended June 30, 2013 and 2012, respectively. Expenses at the corporate level declined from $8,003 to $7,797.

Operating income. Operating income was $87,336 for the six months ended June 30, 2013 compared to $74,374 for the same period last year, an increase of $12,962 (17.4%). Tobacco segment operating income increased to $95,454 in 2013 from $82,105 in 2012 primarily due to higher prices and the NPM settlements in 2013. The real estate segment had an operating loss of $321 for the six months ended June 30, 2013 and had operating income of $272 for the six months ended June 30, 2012. These were related primarily to Escena's operations.

Other income (expenses). Other expenses were$65,824 for the six months ended June 30, 2013 compared to expenses of $80,428 for the same period last year. For the six months ended June 30, 2013, other expenses primarily consisted of interest expense of $65,462 and loss on the extinguishment of debt of $21,458. This was offset by equity income from non-consolidated real estate businesses of $7,285, income of $5,499 from changes in fair value of derivatives embedded within convertible debt, gain on sale of investment securities available for sale of $5,209, other income of $2,280 and equity income on long-term investments of $823. For the six months ended June 30, 2012, other expenses primarily consisted of interest expense of $52,761, a loss of $27,060 from changes in fair value of derivatives embedded within convertible debt, accelerated interest expense related to the conversion of debt of $7,888 and an equity loss on long-term investments of $1,329. This was offset by equity income from non-consolidated real estate businesses of $8,095 and interest and other income of $515.

The value of the embedded derivatives is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt, our stock price as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on our 7.5% Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by our stock price, convertible bond trading price, risk free interest rates and stock volatility.  We recognized income of $5,499 and charges of $27,060 for the six months ended June 30, 2013 and 2012, respectively.

Income (loss) before provision for income taxes. Income before provision for taxes was $21,512 for the six months ended June 30, 2013 compared to a loss before income tax benefit of $6,054 for the six months ended June 30, 2012.

Income tax expense (benefit). The income tax expense was $9,682 for the six months ended June 30, 2013 compared to the benefit of $2,259 for the six months ended June 30, 2012. Our provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual income before provision for income taxes in accordance with guidance on accounting for income taxes on interim periods. For the six months ended June 30, 2013, our income tax expense was increased by approximately $927 is related to the impact of our loss on the extinguishment of our 11% Senior Secured Notes due to the differences in our marginal tax rate and our anticipated effective annual income tax rate at June 30, 2013 as well as the accrual of an unrecognized tax benefit of $121 for the six months ended June 30, 2013. For the six months ended June 30, 2012, our income tax benefit was increased by approximately $769 due primarily to the impact of the acceleration of interest expense related to the conversion of the Company's 3.875% Senior Convertible Debentures due 2026 and decreased by an out-of-period adjustment of approximately $757 related to a non-accrual of a non-deductible expense related to a permanent difference for income taxes in the fourth quarter of 2011.

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Liquidity and Capital Resources

Cash and cash equivalents decreased by $124,142 and $32,175 for the six months endedJune 30, 2013 and 2012, respectively.

Cash provided from operations was $5,190 for the six months endedJune 30, 2013 compared to cash provided by operations of $57,829 for the six months ended June 30, 2012. The change primarily related to cash payments in the 2013 period associated with the extinguishment of our 11% Senior Secured Notes due 2015, lower settlement accruals under the MSA in the 2013 period due to the NPM Settlement and lower unit sales, higher collections of accounts receivable in the 2012 period compared to the 2013 period due to the timing of sales in the fourth quarter of each respective previous year and increased excise tax payments in the 2013 period associated with the timing of shipments during the fourth quarter of 2012. The amounts were offset in part by increased operating income in 2013.

Cash used in investing activities was $78,003 and $17,419 for the six months endedJune 30, 2013 and 2012, respectively. In the first six months of 2013, cash used in investing activities was for investments in consolidated real estate business of $7,657, the purchase of investment securities of $90,368, capital expenditures of $5,995, investment in non-consolidated real estate businesses of $19,048, purchase of long-term investments of $5,000, an decrease in non-current restricted assets of $1,268 and an increase in cash surrender value of corporate-owned life insurance policies of $303. This was offset by the sale of investment securities of $43,115, collections of notes receivable of $8,433, the proceeds from the sale of fixed assets of $13, and proceeds from the sale or liquidation of long-term investments of $75. In the first six months of 2012, cash used in investing activities was for investments in real estate businesses of $9,667, capital expenditures of $7,394, purchase of long-term investments of $5,000, the purchase of investment securities of $1,148, an increase in cash surrender value of corporate-owned life insurance policies of $620, the issuance of notes receivable of $234, and a decrease in non-current restricted assets of $53. This was offset by the proceeds from distributions from non-consolidated real estate businesses of $6,221, the proceeds from the sale of fixed assets of $404, and proceeds from the sale or liquidation of long-term investments of $72.

Cash used in financing activities was $51,329 and $72,585 for the six months endedJune 30, 2013 and 2012, respectively. In the first six months of 2013, cash was used for the repayment of debt of $418,833, distributions on common stock of $71,518, net repayments of debt under the revolver of $2,395 and deferred financing costs of $11,663. This was offset by proceeds from debt issuance of $453,080, In the first six months of 2012, cash was used for distributions on common stock of $66,112, net repayments of debt under the revolver of $6,732, repayment of debt of $13,493, and deferred financing costs of $315. This was offset by proceeds from debt issuance of $14,018, proceeds from the exercise of Vector options of $45, and tax benefit of options exercised of $4.

LiggettCredit Facility. Liggett has a $50,000 credit facility (the "Credit Facility") with Wells Fargo Bank, N.A. (“Wells Fargo”). The Credit Facility is collateralized by all inventories and receivables of Liggett and a mortgage on Liggett’s manufacturing facility. The Credit Facility requires Liggett’s compliance with certain financial and other covenants including a restriction on Liggett’s ability to pay cash dividends unless Liggett’s borrowing availability, as defined, under the credit facility for the 30-day period prior to the payment of the dividend, and after giving effect to the dividend, is at least $5,000 and no event of default has occurred under the agreement, including Liggett’s compliance with the covenants in the credit facility.

The Credit Facility expires on March 8, 2015; provided that Liggett may terminate the Credit Facility prior to March 8, 2015 at any time by giving at least 30 days prior written notice to Wells Fargo, and Wells Fargo may, at Well Fargo's option, terminate the Credit Facility at any time upon the occurrence and during the continuance of an Event of Default. Prime rate loans under the facility bear interest at a rate equal to the prime rate of Wells Fargo with Eurodollar rate loans bearing interest at a rate of 2.0% above Wells Fargo's adjusted Eurodollar rate. The credit facility contains covenants that provide that Liggett’s earnings before interest, taxes, depreciation and amortization, as defined under the credit facility, on a trailing twelve month basis, shall not be less than $100,000 if Liggett’s excess availability, as defined, under the credit facility, is less than $20,000. The covenants also require that annual Capital Expenditures, as defined under the credit facility (before a maximum carryover amount of $2,500), shall not exceed $15,000 during any fiscal year except for 2010, when Liggett was permitted to incur Capital Expenditures of up to $33,000. Liggett had future machinery and equipment purchase commitments of $4,275 at June 30, 2013.

LiggettTerm Loan Under Credit Facility. On February 21, 2012, Wells Fargo amended and restated the existing $5,600 term loan (the “Term Loan”) made to 100 Maple LLC (“Maple”), a subsidiary of Liggett, within the commitment under the Credit Facility. In connection with the amendment and restatement the maturity date of the Term Loan was extended to March 1, 2015 and the outstanding principal amount was paid down to $4,425. The Term Loan bears an interest rate equal to 1.75% more than Wells Fargo's adjusted Eurodollar rate. Monthly payments of $25 are due under the Term Loan from March 1, 2012 to February 1, 2015 ($885 in total) with the balance of $3,540 due at maturity on March 1, 2015.

The Term Loan is collateralized by the existing collateral securing the Credit Facility, including, without limitation, certain real property owned by Maple. The Term Loan did not increase the $50,000 borrowing amount of the Credit Facility, but did

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increase the outstanding amounts under the Credit Facility by the amount of the term loan and proportionately reduces the maximum borrowing availability under the Credit Facility.

The Credit Facility permits the guaranty of our 7.75% senior secured notes due 2021 by each of Liggett and 100 Maple LLC, a subsidiary of Liggett ("Maple") and the pledging of certain assets of Liggett and Maple on a subordinated basis to secure their guarantees. The credit facility also grants to Wells Fargo a blanket lien on all the assets of Liggett and Maple, excluding any equipment pledged to current or future purchase money or other financiers of such equipment and excluding any real property, other than the Mebane Property and other real property to the extent its value is in excess of $5,000. Wells Fargo, Liggett, Maple and the collateral agent for the holders of our 7.75% senior secured notes have entered into an intercreditor agreement, pursuant to which the liens of the collateral agent on the Liggett and Maple assets will be subordinated to the liens of Wells Fargo on the Liggett and Maple assets.

As of June 30, 2013, $31,066 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the Credit Facility was approximately $18,934 based on eligible collateral at June 30, 2013. At June 30, 2013, management believed that Liggett was in compliance with all covenants under the credit facility; Liggett's EBITDA, as defined, were approximately $177,076 for the twelve months ended June 30, 2013.

Tobacco Litigation. In June 2002, the jury in an Engle progeny case awarded $24,835 of compensatory damages against Liggett and two other defendants and found Liggett 50% responsible for the damages. The verdict was affirmed on appeal and Liggett paid $14,361 in June 2010. To date, eight other verdicts have been entered in Engle progeny cases against Liggett in the total amount of approximately $17,671, plus attorneys' fees and interest. Three of these verdicts have been affirmed on appeal. Liggett has satisfied the judgments in two cases. It is possible that additional cases could be decided unfavorably. Liggett may enter into discussions in an attempt to settle particular cases if it believes it is appropriate to do so.

Management cannot predict the cash requirements related to any future settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. Management is unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome of the cases pending against Liggett or the costs of defending such cases. It is possible that our consolidated financial position, results of operations or cash flows could be materially adversely affected by an unfavorable outcome in any such tobacco-related litigation.

Vector.   In February 2013, we issued $450,000 of our 7.75% senior secured notes due 2021 in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. The aggregate net proceeds from the issuance of the 7.75% senior secured notes were approximately $438,250 after deducting offering expenses. We used the net proceeds of the issuance for a cash tender offer for any existing 11% senior secured notes announced on January 29, 2013 with respect to any and all of the outstanding $415,000 of our 11% senior secured notes due 2015. We retired $336,315 of the 11% senior secured notes at a premium of 104.292%, plus accrued and unpaid interest, on February 12, 2013. We called and then retired the remaining $78,685 of the 11% senior secured notes at a redemption price of 103.667% plus accrued and unpaid interest, on March 14, 2013. We recorded a loss on the extinguishment of the debt of $21,458 for the six months ended June 30, 2013, which included $17,820 of premium and tender offer costs and non-cash interest expense of $3,638 related to the write-off of net unamortized debt discount and deferred finance costs.

We agreed to consummate a registered exchange offer for the 7.75% senior secured notes within 360 days after the date of the initial issuance of the 7.75% senior secured notes. In June 2013, we completed an offer to exchange the 7.75% senior secured notes issued in February 2013 for an equal amount of newly issued 7.75% senior secured notes due 2021. The new 7.75% senior secured notes have substantially the same terms as the original notes, except that the new 7.75% senior secured notes have been registered under the Securities Act.

The 7.75% senior secured notes pay interest on a semi-annual basis at a rate of 7.75% per year and mature on February 15, 2021. We may redeem some or all of the 7.75% senior secured notes at any time prior to February 15, 2016 at a make-whole redemption price. On or after February 15, 2016 we may redeem some or all of the 7.75% senior secured notes at a premium that will decrease over time, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date.

The 7.75% senior secured notes are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of our 100% owned domestic subsidiaries that are engaged in the conduct of our cigarette businesses. In addition, some of the guarantees are collateralized by second priority or first priority security interests in certain collateral of some of the subsidiary guarantors, including their common stock, pursuant to security and pledge agreements.

The indenture contains covenants that restrict the payment of dividends if our consolidated earnings before interest, taxes, depreciation and amortization (“Consolidated EBITDA”), as defined in the indenture, for the most recently ended four full quarters is less than $75,000. The indenture also restricts the incurrence of debt if our Leverage Ratio and our Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively. Our Leverage Ratio is defined in the indenture as the ratio of our guaranteeing subsidiaries’ total debt less the fair market value of our cash, investments in marketable securities and long-term investments to Consolidated EBITDA, as defined in the indenture. Our Secured Leverage Ratio is defined in the indenture in the

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same manner as the Leverage Ratio, except that secured indebtedness is substituted for indebtedness. The following table summarizes the requirements of these financial covenants and the results of the calculation, as defined by the indenture.

	Indenture	June 30, 2013	December 31, 2012
Covenant	Requirement
Consolidated EBITDA, as defined	$75,000	$251,630	$231,385
Leverage ratio, as defined	<3.0 to 1	0.9 to 1	0.5 to 1
Secured leverage ratio, as defined	<1.5 to 1	0.2 to 1	Negative

We and our subsidiaries have significant indebtedness and debt service obligations. At June 30, 2013, we and our subsidiaries had total outstanding indebtedness of $929,795. Approximately $157,500  of our 6.75% convertible notes mature in 2014. We are required to offer to repurchase on June 15, 2016, the remaining $43,222 of our 3.875% Variable Interest Senior Convertible Debentures due 2026. Approximately $230,000 of our 7.5% variable interest convertible notes mature in 2019. We incurred an additional $450,000 of indebtedness in connection with the February 2013 offering of our 7.75% senior secured notes due 2021. In addition, subject to the terms of any future agreements, we and our subsidiaries will be able to incur additional indebtedness in the future. There is a risk that we will not be able to generate sufficient funds to repay our debt. If we cannot service our fixed charges, it would have a material adverse effect on our business and results of operations.

We believe that our cigarette operations are positive cash flow generating units and will continue to be able to sustain their operations without any significant liquidity concerns.

In order to meet the above liquidity requirements as well as other anticipated liquidity needs in the normal course of business, we had cash and cash equivalents of approximately $281,700, investment securities available for sale of approximately $134,100, long-term investments with an estimated value of approximately $30,500 and availability under Liggett's credit facility of approximately $18,900 at June 30, 2013. Management currently anticipates that these amounts, as well as expected cash flows from our operations, proceeds from public and/or private debt and equity financing, management fees and other payments from subsidiaries should be sufficient to meet our liquidity needs over the next 12 months.  We may acquire or seek to acquire additional operating businesses through merger, purchase of assets, stock acquisition or other means, or to make other investments, which may limit our liquidity otherwise available.

On a quarterly basis, we evaluate our investments to determine whether an impairment has occurred. If so, we also make a determination if such impairment is considered temporary or other-than-temporary. We believe that the assessment of temporary or other-than-temporary impairment is facts and circumstances driven. However, among the matters that are considered in making such a determination are the period of time the investment has remained below its cost or carrying value, the likelihood of recovery given the reason for the decrease in market value and our original expected holding period of the investment.

Market Risk

We are exposed to market risks principally from fluctuations in interest rates, foreign currency exchange rates and equity prices. We seek to minimize these risks through our regular operating and financing activities and our long-term investment strategy. Our market risk management procedures cover all market risk sensitive financial instruments.

As of June 30, 2013, approximately $31,100 of our outstanding debt at face value had variable interest rates determined by various interest rate indices, which increases the risk of fluctuating interest rates. Our exposure to market risk includes interest rate fluctuations in connection with our variable rate borrowings, which could adversely affect our cash flows. As of June 30, 2013, we had no interest rate caps or swaps. Based on a hypothetical 100 basis point increase or decrease in interest rates (1%), our annual interest expense could increase or decrease by approximately $311.

In addition, as of June 30, 2013, $173,216 ($430,752 principal amount) of outstanding debt had a variable interest rate determined by the amount of the dividends on our common stock. The difference between the stated value of the debt and carrying value is due principally to certain embedded derivatives, which were separately valued and recorded upon issuance. Changes to the estimated fair value of these embedded derivatives are reflected within our statements of operations as “Changes in fair value of derivatives embedded within convertible debt.” The value of the embedded derivative is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt as well as projections of future cash and stock dividends over the term of the debt and changes in the closing stock price at the end of each quarterly period. Based on a hypothetical 100 basis point increase or decrease in interest rates (1%), our annual “Changes in fair value of derivatives embedded within convertible debt” could increase or decrease by approximately $5,292 with approximately $70 resulting from the embedded derivative associated with our 6.75% note due 2014, $133 resulting from the embedded derivative associated with our 6.75%

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exchange notes due 2014, $2,826 resulting from the embedded derivative associated with the 7.5% variable interest senior convertible notes, and the remaining $2,263 resulting from the embedded derivative associated with our 3.875% variable interest senior convertible debentures due 2026. An increase in our quarterly dividend rate by $0.10 per share would increase interest expense by approximately $11,100 per year.

We have estimated the fair market value of the embedded derivatives based principally on the results of a valuation model. The value of the embedded derivatives is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt, our stock price as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on our 7.5% Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by our stock price, convertible bond trading price, risk free interest rates and stock volatility.The range of estimated fair market values of our embedded derivatives was between $169,391 and $163,949. We recorded the fair market value of our embedded derivatives at the midpoint of the inputs at $166,629 as of June 30, 2013. The estimated fair market value of our embedded derivatives could change significantly based on future market conditions.

We held investment securities available for sale totaling $134,141 at June 30, 2013, which includes 13,891,205 common shares of Ladenburg Thalmann Financial Services Inc. carried at $22,920 and 1,000,000 warrants carried at $738.

We and New Valley also hold long-term investments in various investment partnerships. These investments are illiquid, and their ultimate realization is subject to the performance of the underlying entities.

New Accounting Pronouncements

Refer to Note 1, Summary of Significant Accounting Policies, to our financial statements for further information on New Accounting Pronouncements.

Legislation and Regulation

Reports with respect to the alleged harmful physical effects of cigarette smoking have been publicized for many years and, in the opinion of Liggett’s management, have had and may continue to have an adverse effect on cigarette sales. Since 1964, the Surgeon General of the United States and the Secretary of Health and Human Services have released a number of reports which state that cigarette smoking is a causative factor with respect to a variety of health hazards, including cancer, heart disease and lung disease, and have recommended various government actions to reduce the incidence of smoking. In 1997, Liggett publicly acknowledged that, as the Surgeon General and respected medical researchers have found, smoking causes health problems, including lung cancer, heart and vascular disease, and emphysema.

On June 22, 2009, the President signed into law the Family Smoking Prevention and Tobacco Control Act (the "Tobacco Control Act"). The law grants the Food and Drug Administration (“FDA”) broad authority over the manufacture, sale, marketing and packaging of tobacco products, although FDA is prohibited from banning all cigarettes or all smokeless tobacco products, or requiring the reduction of nicotine yields of a tobacco product to zero. Among other measures, the law (under various deadlines):

• increases the number of health warnings required on cigarette and smokeless tobacco products, increases the size of warnings on packaging and in advertising, requires FDA to develop graphic warnings for cigarette packages, and grants FDA authority to require new warnings;

• requires practically all tobacco product advertising to eliminate color and imagery and instead consist solely of black text on white background;

• imposes new restrictions on the sale and distribution of tobacco products, including significant new restrictions on tobacco product advertising and promotion, as well as the use of brand and trade names;

• bans the use of “light,” “mild,” “low” or similar descriptors on tobacco products;

• bans the use of “characterizing flavors” in cigarettes other than tobacco or menthol;

• gives FDA the authority to impose tobacco product standards that are appropriate for the protection of the public health (by, for example, requiring reduction or elimination of the use of particular constituents or components, requiring product testing, or addressing other aspects of tobacco product construction, constituents, properties or labeling);

• requires manufacturers to obtain FDA review and authorization for the marketing of certain new or modified tobacco products;

• requires pre-market approval by FDA for tobacco products represented (through labels, labeling, advertising, or other means) as presenting a lower risk of harm or tobacco-related disease;

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• requires manufacturers to report ingredients and harmful constituents and requires FDA to disclose certain constituent information to the public;

• mandates that manufacturers test and report on ingredients and constituents identified by FDA as requiring such testing to protect the public health, and allows FDA to require the disclosure of testing results to the public;

• requires manufacturers to submit to FDA certain information regarding the health, toxicological, behavioral or physiological effects of tobacco products;

• prohibits use of tobacco containing a pesticide chemical residue at a level greater than allowed under federal law;

• requires FDA to establish “good manufacturing practices” to be followed at tobacco manufacturing facilities;

• requires tobacco product manufacturers (and certain other entities) to register with FDA;

• authorizes FDA to require the reduction of nicotine (although it may not require the reduction of nicotine yields of a tobacco product to zero) and the potential reduction or elimination of other constituents, including menthol;

• imposes (and allows FDA to impose) various recordkeeping and reporting requirements on tobacco product manufacturers; and

• grants FDA the regulatory authority to impose broad additional restrictions.

The law also required establishment, within FDA’s new Center for Tobacco Products, of a Tobacco Products Scientific Advisory Committee (“TPSAC”) to provide advice, information and recommendations with respect to the safety, dependence or health issues related to tobacco products, including:

• a recommendation on modified risk applications;

• a recommendation on the effects of tobacco product nicotine yield alteration and whether there is a threshold level below which nicotine yields do not produce dependence;

• a report on the public health impact of the use of menthol in cigarettes; and

• a report on the public health impact of dissolvable tobacco products.

TPSAC completed its review of the use of menthol in cigarettes and issued a report with recommendations to FDA in March 2011. The report states that “removal of menthol cigarettes from the marketplace would benefit public health in the United States,” but does not expressly recommend that FDA ban menthol cigarettes. FDA is considering the report and recommendations of TPSAC and will make a determination about what future regulatory action, if any, it believes is warranted. A decision by FDA to ban menthol in tobacco products could have a material adverse effect on us.

The law imposes user fees on certain tobacco product manufacturers in order to fund tobacco-related FDA activities. User fees will be allocated among tobacco product classes according to a formula set out in the legislation, and then among manufacturers and importers within each class based on market share. FDA user fees for Liggett and Vector Tobacco for 2012 were $17,308 and we estimate that they will increase in the future.

The law also imposes significant new restrictions on the advertising and promotion of tobacco products. For example, as required under the law, FDA has reissued certain regulations previously issued by them in 1996 (which were struck down by the Supreme Court in 2000 as beyond FDA's authority). Subject to limitations imposed by a federal injunction (discussed below), these regulations took effect on June 22, 2010. As written, these regulations significantly limit the ability of manufacturers, distributors and retailers to advertise and promote tobacco products, by, for example, restricting the use of color and graphics in advertising, limiting the use of outdoor advertising, restricting the sale and distribution of non-tobacco items and services, gifts, and sponsorship of events, and imposing restrictions on the use for cigarette or smokeless tobacco products of trade or brand names that are used for nontobacco products.

In August 2009, several cigarette manufacturers filed a federal lawsuit against FDA challenging the constitutionality of a number of the restrictions imposed by the Tobacco Control Act, including the ban on color and graphics in advertising, the color graphic and non-graphic warning label requirement, limits on the right to make truthful statements regarding modified risk tobacco products, restrictions on the placement of outdoor advertising, and a ban on the distribution of product samples. In January 2010, a federal district court in Kentucky ruled that the regulations' ban on the use of color and graphics in certain tobacco product advertising was unconstitutional and prohibited FDA from enforcing that ban. The court, however, let stand numerous other advertising and promotion restrictions. In March 2010, both parties appealed this decision. In May 2010, FDA issued a guidance document indicating that it intends to exercise its enforcement discretion and not commence enforcement actions based upon these provisions during the pendency of the litigation. In March 2012, a federal appellate court reviewing the district court's decision also let stand numerous advertising and promotion restrictions, but held that the ban on the use of color and graphics in advertising was unconstitutional. In May 2012, the federal appellate court denied the cigarette manufactures' petition for rehearing en banc.

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In October 2012, the cigarette manufacturers filed a petition for writ of certiorari in the United States Supreme Court which was denied in April 2013.

In April 2010, a number of cigarette manufacturers filed a federal lawsuit against FDA challenging the restrictions on trade or brand names based upon First Amendment and other grounds. In May 2010, FDA issued a guidance document indicating that FDA was aware of concerns regarding the trade and brand name restrictions and is considering what changes, if any, would be appropriate to address those concerns. FDA also indicated that while the agency was considering those issues, it intended to exercise its enforcement discretion and not commence trade or brand name enforcement actions for the duration of its consideration where: (1) the trade or brand name of the cigarettes or smokeless tobacco product was registered, or the product was marketed, in the United States on or before June 22, 2009; or (2) the first marketing or registration in the United States of the tobacco product occurs before the first marketing or registration in the United States of the non-tobacco product bearing the same name; provided, however, that the tobacco and non-tobacco product are not owned, manufactured, or distributed by the same, related, or affiliated entities (including as a licensee). The lawsuit was subsequently stayed, at the request of the parties, pending FDA's evaluation of these concerns. In November 2011, FDA issued a proposal to amend its trade name restrictions. The proposal remains under consideration by the FDA. We cannot predict the future course of this proposed amendment or its potential impact on the litigation.

In June 2011, FDA issued a final rule that would have modified the required warnings that appear on cigarette packages and in cigarette advertisements. The rule would have required each cigarette package and advertisement to bear one of nine new textual warning statements accompanied by graphic images. The warnings would appear on at least the top 50% of the front and rear panels of cigarette packages and occupy at least 20% of cigarette advertisements. In August 2011, a number of cigarette manufacturers, including Liggett, filed a federal lawsuit against FDA challenging the constitutionality of these new graphic images on First Amendment and other grounds and seeking an injunction staying implementation of the graphic images, and other related labeling requirements. In February 2012, the court granted the industry's motion for summary judgment permanently enjoining implementation of FDA's graphic warnings regulation on First Amendment grounds. This decision was affirmed on appeal and FDA did not seek United States Supreme Court review. Should FDA ultimately issue new graphic warnings that are deemed constitutionally valid, the decision provides that such warnings would go into effect 15 months after they are issued. We cannot predict how the inclusion of new warnings, if ultimately required by FDA in new rulemaking, will impact product sales or whether it will have a material adverse effect on us.

The Tobacco Control Act requires premarket review of “new tobacco products.” A “new tobacco product” is one that was not commercially marketed in the U.S. before February 15, 2007 or that was modified after that date. In general, before a company may commercially market a “new tobacco product,” it must either (a) submit an application and obtain an order from FDA permitting the product to be marketed; or (b) submit a report and receive an FDA order finding the product to be “substantially equivalent” to a “predicate” tobacco product that was commercially marketed in the U.S. prior to February 15, 2007. A “substantially equivalent” tobacco product is one that has the “same characteristics” as the predicate or one that has “different characteristics” but does not raise “different questions of public health.”

Manufacturers of products first introduced after February 15, 2007 and before March 22, 2011 who submitted a substantial equivalence report to FDA prior to March 23, 2011 may continue to market the tobacco product unless FDA issues an order that the product is not substantially equivalent. Failure to timely submit the report, or FDA's conclusion that such a “new tobacco product” is not substantially equivalent, will cause the product to be deemed misbranded and/or adulterated. After March 22, 2011, a “new tobacco product” may not be marketed without an FDA substantial equivalence determination. Prior to the deadline, Liggett and Vector Tobacco submitted substantial equivalence reports to FDA for numerous products. It is possible that FDA could determine some, or all, of these products are not “substantially equivalent” to a preexisting tobacco product. Such a determination could prevent us from marketing these products in the United States and could have a material adverse effect on us.

It is likely that the Tobacco Control Act could result in a decrease in cigarette sales in the United States, including sales of Liggett's and Vector Tobacco's brands. Total compliance and related costs are not possible to predict and depend on the future requirements imposed by FDA under the new law. Costs, however, could be substantial and could have a material adverse effect on the companies' financial condition, results of operations, and cash flows. Failure to comply with the Tobacco Control Act and with FDA regulatory requirements could result in significant financial penalties and could have a material adverse effect on the business, financial condition and results of operation of both Liggett and Vector Tobacco. At present, we are not able to predict whether the Tobacco Control Act will impact Liggett and Vector Tobacco to a greater degree than other companies in the industry, thus affecting its competitive position.

In October 2004, the Fair and Equitable Tobacco Reform Act of 2004 (“FETRA”) was signed into law. FETRA provides for the elimination of the federal tobacco quota and price support program through an industry funded buyout of tobacco growers and quota holders. Pursuant to the legislation, manufacturers of tobacco products have been assessed $10,140,000 over a ten year period, commencing in 2005, to compensate tobacco growers and quota holders for the elimination of their quota rights. For 2012, cigarette manufacturers were responsible for approximately 89% of the assessment based on relative unit volume of domestic

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cigarette shipments. Liggett’s and Vector Tobacco’s assessment was $30,874 for 2012. The annual assessments are set to expire at the end of 2014.

Cigarettes are subject to substantial and increasing federal, state and local excise taxes. On April 1, 2009, the federal cigarette excise tax increased from $0.39 to $1.01 per pack. State excise taxes vary considerably and, when combined with sales taxes, local taxes and the federal excise tax, may exceed $4.00 per pack. Both the Federal government and many states are considering, or have pending, legislation proposing further excise tax increases. Management believes increases in excise and similar taxes have had, and will continue to have, an adverse effect on sales of cigarettes.

Over the last several years all 50 states and the District of Columbia have enacted virtually identical legislation requiring cigarettes to meet a laboratory test standard for reduced ignition propensity. Cigarettes that meet this standard are referred to as “fire standards compliant” or “FSC,” and are sometimes commonly called “self-extinguishing.” All of the cigarettes that Liggett and Vector Tobacco manufacture are fire standards compliant. Compliance with such legislation is burdensome and costly and could harm the business of Liggett and Vector Tobacco, particularly if standards were to vary from state to state.

A wide variety of federal, state and local laws limiting the advertising, sale and use of cigarettes have proliferated in recent years. For example, many local laws prohibit smoking in restaurants and other public places, and many employers have initiated programs restricting or eliminating smoking in the workplace. There are various other legislative efforts pending at the federal, state or local level which seek to, among other things, eliminate smoking in public places, curtail affirmative defenses of tobacco companies in product liability litigation, and further restrict the sale, marketing and advertising of cigarettes and other tobacco products. This trend has had, and is likely to continue to have, an adverse effect on us. It is not possible to predict what, if any, additional legislation, regulation or other governmental action will be enacted or implemented.

In addition to the foregoing, there have been a number of other restrictive regulatory actions, adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry. These developments may negatively affect the perception of potential triers of fact with respect to the tobacco industry, possibly to the detriment of certain pending litigation, and may prompt the commencement of additional similar litigation or legislation.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements include information relating to our intent, belief or current expectations, primarily with respect to, but not limited to:

• economic outlook,

• capital expenditures,

• cost reduction,

• legislation and regulations,

• cash flows,

• operating performance,

• litigation,

• impairment charges and cost saving associated with restructurings of our tobacco operations, and

• related industry developments (including trends affecting our business, financial condition and results of operations).

We identify forward-looking statements in this report by using words or phrases such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may be”, “objective”, “plan”, “seek”, “predict”, “project” and “will be” and similar words or phrases or their negatives.

The forward-looking information involves important risks and uncertainties that could cause our actual results, performance or achievements to differ materially from our anticipated results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following:

• general economic and market conditions and any changes therein, due to acts of war and terrorism or otherwise,

• governmental regulations and policies,

• effects of industry competition,

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• impact of business combinations, including acquisitions and divestitures, both internally for us and externally in the tobacco industry,

• impact of legislation on our competitors’ payment obligations, results of operations and product costs, i.e. the impact of federal legislation eliminating the federal tobacco quota system and providing for regulation of tobacco products by the FDA,

• impact of substantial increases in federal, state and local excise taxes,

• uncertainty related to product liability litigation including the Engle progeny cases pending in Florida; and,

• potential additional payment obligations for us under the MSA and other settlement agreements with the states.

Further information on the risks and uncertainties to our business include the risk factors discussed above in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and under Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission.

Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, there is a risk that these expectations will not be attained and that any deviations will be material. The forward-looking statements speak only as of the date they are made.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations - Market Risk” is incorporated herein by reference.

ITEM 4.CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on their evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures are effective.

There were no changes in our internal control over financial reporting during the second quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1.     Legal Proceedings

Reference is made to Note 6, incorporated herein by reference, to our condensed consolidated financial statements included elsewhere in this report which contains a general description of certain legal proceedings to which our company, or its subsidiaries are a party and certain related matters. Reference is also made to Exhibit 99.1 for additional information regarding the pending smoking-related legal proceedings to which Liggett or us is a party. A copy of Exhibit 99.1 will be furnished without charge upon written request to us at our principal executive offices, 4400 Biscayne Boulevard, 10th Floor, Miami, Florida 33137, Attn. Investor Relations.

Item 1A. Risk Factors

Except as set forth below, there are no material changes from the risk factors set forth in Item 1A, “Risk Factors,” of our Annual Report on 10-K, as amended, for the year ended December 31, 2012.

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We have significant liquidity commitments

We have certain liquidity commitments that could require the use of our existing cash resources. As of June 30, 2013, our corporate expenditures (exclusive of Liggett, Vector Tobacco and New Valley) and other potential liquidity requirements over the next 12 months included the following:

• cash interest expense of approximately $92.4 million,

• dividends on our outstanding common shares (currently at an annual rate of approximately $152.8 million, and

• other corporate expenses and taxes.

In order to meet the above liquidity requirements as well as other liquidity needs in the normal course of business, we will be required to use cash flows from operations and existing cash and cash equivalents. Should these resources be insufficient to meet the upcoming liquidity needs, we may also be required to liquidate investment securities available for sale and other long-term investments, or, if available, draw on Liggett's credit facility. While there are actions we can take to reduce our liquidity needs, there can be no assurance that such measures can be achieved.

We and our subsidiaries have a substantial amount of indebtedness.

We and our subsidiaries have significant indebtedness and debt service obligations. At June 30, 2013, we and our subsidiaries had total outstanding indebtedness of $929,795. Approximately $157,500  of our 6.75% convertible notes mature in 2014. We are required to offer to repurchase on June 15, 2016, the remaining $43,222 of our 3.875% Variable Interest Senior Convertible Debentures due 2026. Approximately $230,000 of our 7.5% variable interest convertible notes mature in 2019. We incurred an additional $450,000 of indebtedness in connection with the February 2013 offering of our 7.75% senior secured notes due 2021. In addition, subject to the terms of any future agreements, we and our subsidiaries will be able to incur additional indebtedness in the future. There is a risk that we will not be able to generate sufficient funds to repay our debt. If we cannot service our fixed charges, it would have a material adverse effect on our business and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

No securities of ours which were not registered under a private offering of the Securities Act of 1933 have been issued or sold by us during the three months ended June 30, 2013.

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Item 6.    Exhibits

10.1	Vector Group Ltd. Equity Retention and Hedging Policy (incorporated by reference to Exhibit 10.1 of Vector's Form 8-K dated January 15, 2013).
12.1	Computation of Ratio of Earnings to Fixed Charges for each of the five years within the period ended December 31, 2012 and for each of the six months within the periods ended June 30, 2013 and 2012.
31.1	Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Material Legal Proceedings
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		VECTOR GROUP LTD.
		(Registrant)
		By: /s/ J. Bryant Kirkland III
		J. Bryant Kirkland III
		Vice President, Treasurer and
		Chief Financial Officer
Date:	July 31, 2013

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EX-12.1

Exhibit 12.1

VECTOR GROUP LTD.

Computation of Ratio of Earnings to Fixed Charges

(Dollars in Thousands, Except Ratios)

(Unaudited)

	Six Months Ended June 30,				Year Ended December 31,
	2013		2012		2012		2011		2010		2009		2008
Earnings as defined:
Pre-tax income (loss)	21,512		(6,054	)	53,717		123,157		85,570		28,537		94,572
Distributions from investees	2,891		5,207		19,169		9,322		12,212		6,715		13,741
Interest expense	81,421		87,709		132,538		93,939		72,572		104,415		37,998
(Income) in equity of affiliate	(7,285	)	(8,095	)	(29,764	)	(19,966	)	(23,963	)	(15,213	)	(24,399	)
Interest portion of rental expense (1)	1,010		704		1,367		1,438		1,223		1,301		1,275
Total earnings	99,549		79,471		177,027		207,890		147,614		125,755		123,187
Fixed charges as defined:
Interest expense	81,421		87,709		132,538		93,939		72,572		104,415		37,998
Interest portion of rent expense (1)	1,010		704		1,367		1,438		1,223		1,301		1,275
Total fixed charges	82,431		88,413		133,905		95,377		73,795		105,716		39,273
Ratio of earnings to fixed charges	1.21		0.9		1.32		2.18		2.00		1.19		3.14

________________________

(1) One-third of rent expense is the portion deemed representative of the interest factor.

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Howard M. Lorber, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Vector Group Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 31, 2013

/s/ Howard M. Lorber

Howard M. Lorber

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, J. Bryant Kirkland III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Vector Group Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 31, 2013

/s/ J. Bryant Kirkland III

J. Bryant Kirkland III

Vice President, Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard M. Lorber, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 31, 2013

/s/ Howard M. Lorber

Howard M. Lorber

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Bryant Kirkland III, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 31, 2013

/s/ J. Bryant Kirkland III

J. Bryant Kirkland III

Vice President, Treasurer and Chief Financial Officer

EX-99.1

Exhibit 99.1

Pursuant to the Florida Supreme Court's July 2006 ruling in Engle v. Liggett Group Inc., which decertified the Engle class on a prospective basis, former class members had one year from January 11, 2007 to file individual lawsuits. In addition, some individuals who filed suit prior to January 11, 2007, and who claim they meet the conditions in Engle, are attempting to avail themselves of the Engle ruling. Lawsuits by individuals requesting the benefit of the Engle ruling, whether filed before or after the January 11, 2007 mandate, are hereinafter referred to as the “Engle progeny” cases. As of June 30, 2013, Liggett and/or the Company are named in 4,300Engle progeny cases in both state and federal courts in Florida. These cases include approximately 5,481 plaintiffs. The total number of state court cases may increase as courts may require multi-plaintiff cases to be severed into individual cases. The total number of plaintiffs may increase as a result of attempts by existing plaintiffs to add additional parties. For more information on the Engle case, see “Note 6. Contingencies.”

(i) Engle Progeny Cases with trial dates through June 30, 2014.

Banks v. R.J. Reynolds, et al., Case No. 08-026337, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for the trial period of 01/14 - 03/14.

Barnes v. R.J. Reynolds, et al., Case No. 2011-CA-004965, Circuit Court of the 10^th Judicial Circuit, Polk County (case filed 10/17/11). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 02/03/14.

Baum v. R.J. Reynolds, et al., Case No. 10-CA-60768, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 11/23/10). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 01/06/14.

Blasco v. R.J. Reynolds, et al., Case No. 07-46473, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 12/28/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 11/18/13.

Bowden v. R.J. Reynolds, et al., Case No. 16-2008-CA-000391-CXXXMA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 01/09/08).  One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 02/02/14.

Brown, B. v. R.J. Reynolds, et al., Case No. 2007-CA-2907, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 12/03/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled as the back-up case to H. Brown starting 09/16/13 and to Walden starting 03/03/14.

Brown, H. v. R.J. Reynolds, et al., Case No. 2007-CA-2855, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 11/28/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 09/16/13.

Bush v. R.J. Reynolds, et al., Case No. 2007-CA-3083, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 01/07/08).  Two individuals suing.  The case is scheduled for trial starting 01/06/14.

Clayton v. R.J. Reynolds, et al., Case No. 2007-CA-11175-CXXX-MA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 11/29/07). The case is scheduled for trial starting 11/04/13.

Clark v. R.J. Reynolds, et al., Case No. 07-CA-22588-AE,  Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 12/07/07).  One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 04/07/14.

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Cobb v. R.J. Reynolds, et al., Case No. 2007-CA-11175-DXXX-MA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 11/29/07). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 11/04/13.

Dupre v. R.J. Reynolds, et al., Case No. 2011-CA-005529, Circuit Court of the 12^th Judicial Circuit, Manatee County (case filed 08/22/11). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 04/14/14.

Ferqueron v. Philip Morris USA Inc., et al., Case No. 07-012493, Circuit Court of the 6^th Judicial Circuit, Pinellas County (case filed 11/29/07). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 10/03/13.

Frost, et al., v. R.J. Reynolds, et al., Case No. GC-08-42, Circuit Court of the 10th Judicial Circuit, Highlands County (case filed 01/10/08). Two individuals suing. The case is scheduled for trial starting 02/14.

Goveia v. R.J. Reynolds, et al., Case No. 2008-CA-760, Circuit Court of the 9^th Judicial Circuit, Orange County (case filed 01/10/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 01/06/14.

Jones v. R.J. Reynolds, et al., Case No. 2007-CA-3090, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 12/20/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled as the back up trial to O'Hara starting 11/12/13. If it is not reached, the case is scheduled for trial starting 04/28/14.

Josey v. R.J. Reynolds, et al., Case No. 2008-CA-061, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 01/07/08).  One individual suing. The case is scheduled as a back up case to Jones starting 04/28/14.

Katz v. R.J. Reynolds, et al., Case No. 50-2009-CA-004037, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 02/04/09). One individual suing on behalf of the estate and survivors of a deceased smoker. Liggett and Vector are the only remaining defendants. The case is scheduled for trial starting 01/03/14.

Ledoux v. R.J. Reynolds, et al., Case No. 07-43991, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 12/12/07). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is tentatively scheduled for trial no earlier than 10/07/13.

Lustig v. R.J. Reynolds, et al., Case No. 11-20501 (19), Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 08/25/11).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 01/13/14.

McCurley v. Reynolds, et al., Case No. 2007-CA-3068, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 04/15/08). Two individuals suing. The case is scheduled as a back up case to Torgerson starting 06/23/14.

McGriff v. R.J. Reynolds, et al., Case No. 50-2008-CA-000796, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/10/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 01/16/14.

McMannis v. R.J. Reynolds, et al., Case No. 12001468CA, Circuit Court of the 20^th Judicial Circuit, Charlotte County (case filed 11/21/07). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 05/06/14.

2

Mehlenbacher, et al. v. R.J. Reynolds, et al., Case No. 01-2008-CA-3118, Circuit Court of the 8^th Judicial Circuit, Alachua County (case filed 06/09/08). Two individuals suing. The case is scheduled for trial starting 03/03/14.

Miller v. R.J. Reynolds, et al., Case No. 2013-CA-009550, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 03/14/13). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 05/01/14.

O'Hara v. R.J. Reynolds, et al., Case No. 2007-CA-3065, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 12/18/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 11/12/13.

Rizzuto v. R.J. Reynolds, et al., Case No. H27-CA-2008-003318, Circuit Court of the 5^th Judicial Circuit, Hernando County (case filed 05/21/08). The case is scheduled for trial starting 08/12/13.

Robinson v. R.J. Reynolds, et al., Case No. 2008-CA-098, Circuit Court of 1^st Judicial Circuit, Escambia County (case filed 01/24/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled as a back up case to Bush starting 01/06/14.

Schrack v. R.J. Reynolds, et al., Case No. 01-2008-CA-3124, Circuit Court of the 8^th Judicial Circuit, Alachua County (case filed 06/09/08).  Two individuals suing.  The case is scheduled for trial starting 04/07/14.

Surico v. R.J. Reynolds, et al., Case No. 09-CA-000891, Circuit Court of the 20^th Judicial Circuit, Lee County (case filed 02/25/09). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 03/04/14.

Torgerson v. R.J. Reynolds, et al., Case No. 2007-CA-3090, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 07/14/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 06/23/14.

Vila v. R.J. Reynolds, et al., Case No. 13-12833, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed  04/09/13).  One individual suing.  The case is scheduled for trial starting 02/14.

Walden v. R.J. Reynolds, et al., Case No. 2007-CA-2539, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 01/24/08).  One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 03/03/14.

Wendel v. R.J. Reynolds, et al., Case No. 10-54813, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 10/12/10). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 03/31/14.

(ii) Post-Trial Engle Progeny Cases.

Buchanan v. R.J. Reynolds, et al., Case No. 2007-CA-3565, Circuit Court of the 2^nd Judicial Circuit, Leon County (case filed 12/17/07). This was a wrongful death action which proceeded to jury trial in November 2012. On December 7, 2012, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $5,500,000. The jury apportioned fault as follows: decedent - 26%, Philip Morris - 37% and Liggett - 37% ($2,035,000). In April 2012, a joint and several judgment for $5,500,000 was entered against the defendants. In April 2013, the defendants filed a notice of appeal.

Calloway v. R.J. Reynolds, et al., Case No. 08-21770, Circuit Court of the17^th Judicial Circuit, Broward County (case filed 05/15/08). This was a wrongful death action which proceeded to jury trial in April 2012. In May 2012, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount

3

of $20,500,000.  The jury apportioned fault as follows: decedent - 20.5%, R.J. Reynolds - 27%, Philip Morris - 25%, Lorillard - 18% and Liggett - 9.5% ($1,947,500).  In August 2012, a joint and several judgment for compensatory damages of $16,100,000 was entered against all of the defendants, plus interest, and an order of entitlement to attorneys' fees and costs was also entered against the defendants. In addition, judgment was entered against Liggett for $7,600,000 in punitive damages. In September 2012, the defendants filed a notice of appeal. The plaintiffs filed a notice of cross-appeal. Briefing is underway.

Cohen, D. v. R.J. Reynolds, et al., Case No. 09-004042, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 02/04/09).  One individual suing on behalf of the estate and survivors of a deceased smoker.  Trial commenced on April 4, 2013. On May 1, 2013, the jury returned a verdict in favor of the plaintiff and compensatory damages in the amount of $2,000,000, plus $55,000 in expenses. The jury apportioned fault as follows: defendant - 40%, RJR - 30%, Lorillard - 20% and Liggett - 10% ($200,000). On June 24, 2013, the trial court granted defendants' motion for a new trial.

Douglas v. R.J. Reynolds, et al., Case No. 08-8108, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 11/02/07). This was a wrongful death action which proceeded to jury trial in March 2010. In March 2010, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $5,000,000. The jury apportioned fault as follows: plaintiff - 50%, Liggett - 27% ($1,350,000), Philip Morris - 18% and R.J. Reynolds - 5%. Plaintiff did not seek punitive damages. In March 2012, the judgment was affirmed by the Second District Court of Appeal. In March 2013, the Florida Supreme Court affirmed. Plaintiff moved for an award of attorneys' fees against Liggett pursuant to the fee shifting provisions of Florida's proposal for settlement statute based on a settlement offer that was not accepted by Liggett. The parties reached a confidential settlement agreement regarding the attorneys' fees incurred through trial. Liggett intends to file a petition for writ of certiorari with the United States Supreme Court.

Putney v. R.J. Reynolds, et al., Case No. 07-36668, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 12/28/07). This was a wrongful death action which proceeded to jury trial in March 2010. In April 2010, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $15,000,000. The jury apportioned fault as follows: plaintiff - 35%, Liggett - 20% ($3,008,138), R.J. Reynolds - 30% and Philip Morris - 15%. No punitive damages were awarded against Liggett. Defendants appealed the final judgment to the Fourth District Court of Appeal. The verdict was affirmed in part and reversed in part.   Defendants argued that the jury's finding against them on plaintiff's claim for conspiracy should be reversed because the jury found in their favor on the underlying tort of fraudulent concealment.  The Fourth District Court of Appeal held that because of the nature of the case, including the applicability of the Engle findings regarding concealment and conspiracy and the number of conspirators involved, that an exception to the general rule cited by Defendants applied and held that the conspiracy claim in the case was an independent, free-standing tort.  Defendants further argued that plaintiff did not prove that decedent relied upon any co-conspirator statements.  Relying on Martin, the Fourth District Court of Appeal found that there was sufficient evidence in the record to infer that decedent relied to her detriment on pervasive misleading advertising campaigns and the false controversy aimed at creating doubt among smokers that cigarettes were hazardous to health, without the need to prove that she relied on any specific statement.  The Fourth District Court of Appeal reversed and remanded the case for further proceedings, however, because it found that the trial court erred in entering summary judgment against defendants' on their statute of repose defense and in denying Defendants' Motion for Remittitur of the compensatory damage award for loss of consortium, finding the award excessive.  Plaintiff filed a motion for rehearing. Plaintiff also moved for an award of attorneys' fees against Liggett pursuant to the fee shifting provisions of Florida's proposal for settlement statute based on a settlement offer that was not accepted by Liggett.  Entitlement to an attorney fee award has been entered, and the amount of such award will be determined in a separate proceeding.

Tullo v. R.J. Reynolds, et al., Case No. 2008-CA-035457, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 11/14/08). This was a wrongful death action which proceeded to jury trial in March 2011. In April 2011, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $4,500,000. The jury apportioned damages as follows: plaintiff - 45%, Philip Morris - 45%, Liggett

4

- 5% ($225,000) and Lorillard - 5%. No punitive damages were awarded. Defendants appealed the final judgment to the Fourth District Court of Appeal. Oral argument occurred on June 19, 2013.

Ward v. R.J. Reynolds, et al., Case No. 2008-CA-2135, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 12/13/07). This was a wrongful death action which proceeded to jury trial in January 2012. In January 2012, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $1,000,000. The jury apportioned fault as follows: plaintiff - 50%, R.J. Reynolds - 30%, Philip Morris - 10%, Lorillard - 9.9% and Liggett - 0.1% ($1,000). Philip Morris and Lorillard were dismissed from the case before trial. No punitive damages were awarded against Liggett. A joint and several judgment was entered against RJR and Liggett for $487,000. Post-trial motions were denied. Defendants appealed the final judgment to the First District Court of Appeal. The plaintiff filed a notice of cross-appeal. Oral argument occurred on July 17, 2013. Plaintiff moved for an award of attorneys' fees against Liggett pursuant to the fee shifting provisions of Florida's proposal for settlement statute based on a settlement offer that was not accepted by Liggett.  Defendants appealed the court's ruling that plaintiff was entitled to attorneys' fees. The parties reached a confidential settlement agreement regarding the attorneys' fees incurred through trial, which agreement is contingent upon the pending appeal of the attorneys' fee order and the compensatory damages award.

B. Other Individual Cases.

Bagshaw v. R.J. Reynolds, et al., Case No. 06-CA-004768, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 06/01/06). One individual suing.

Beatty v. R.J. Reynolds, et al., Case No. 50-2009-CA-032435 (AB), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 09/24/09). Two individuals suing.

Brown, E. v. Brown & Williamson Tobacco Co., et al., Case No. 05-CA-004822, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 06/03/05). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Brown, J. v. R.J. Reynolds, et al., Case No. 05-CA-000790, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/26/05). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Bryant v. Philip Morris Inc., et al., Case No. 50-2008-CA-25429 (AJ), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 08/25/08).  One individual suing as personal representative of the estate and survivors of a deceased smoker.

Cagle v. Philip Morris USA Inc., et al., Case No. 02-CA-010718, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 11/13/02). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Caldwell v. Philip Morris Inc., et al., Case No. 08-000391 (AA), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/07/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.

Calhoun v. Brown & Williamson Tobacco Co., et al., Case No. 02-CA-007970, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 08/27/02). Three individuals suing on behalf of the estate and survivors of a deceased smoker.

5

Coffey v. Brown & Williamson Tobacco Co., et al., Case No. 01-CA-009935, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 11/14/01). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Colic v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-010844, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 11/18/03). One individual suing on behalf of the estate and survivors of a deceased smoker.

Cotto v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-000748, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/22/03). One individual suing on behalf of the estate and survivors of a deceased smoker.

Cowart v. Liggett Group Inc., et al., Case No. 98-01483-CA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 03/16/98). One individual suing. Liggett is the only tobacco company defendant in this case. The case is dormant.

Cox v. R.J. Reynolds, et al., Case No. 05-CA-000677, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/21/05). One individual suing.

Diamond v. R.J. Reynolds, et al., Case No. 08-24533, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 05/30/08).  One individual suing.

Ditslear v. R.J. Reynolds, et al., Case No. 05-CA-000899, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/28/05). One individual suing.

Fine v. Philip Morris, Inc., et al., Case No. 08-000383 (AA), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/07/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.

Fuchs v. R.J. Reynolds, et al., Case No. 05-CA-000681, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/21/05). One individual suing.

Garcia v. R.J. Reynolds, et al., Case No. 05-CA-004159, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 05/11/05). One individual suing.

Grant v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-002673, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 03/17/03). One individual suing on behalf of the estate and survivors of a deceased smoker.

Grose v. R.J. Reynolds, et al., Case No. 08-38276, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 08/15/08).  One individual suing as personal representative of the estate and survivors of a deceased smoker. In addition to Liggett, Vector Tobacco Inc. was named as a defendant. In October 2008, Defendants filed a motion to dismiss the complaint. A hearing has not been scheduled.

Hikin, et al. v. Philip Morris Inc., et al., Case No. 08-57479, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 11/21/08). Two individuals suing.

Hearne v. R.J. Reynolds, et al., Case No. 06-CA-000550, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 01/20/06). One individual suing.

Hecker v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-009336, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 10/07/03). One individual suing.

6

Hutto v. R.J. Reynolds, et al., Case No. 05-CA-002552, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 03/22/05). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Laschke, et al. v. R.J. Reynolds, et al., Case No. 96-8131-CI-008, Circuit Court of the 6^th Judicial Circuit, Pinellas County (case filed 12/20/96). Two individuals suing. The dismissal of the case was reversed on appeal, and the case was remanded to the trial court. An amended complaint was filed by the plaintiffs. In January 2006, defendants filed motions to dismiss the amended complaint. A hearing has not been scheduled.

Lewis v. R.J. Reynolds, et al., Case No. 05-CA-002167, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 03/09/05). One individual suing.

McBride v. Brown & Williamson Tobacco Co., et al., Case No. 02-CA-005085, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 06/04/02). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

McDonald v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-004767, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 05/19/03). One individual suing. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

McKeever v. R.J. Reynolds Tobacco Co., et al., Case No. 09-87681, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 12/04/09).  Two individuals suing.

Meckler v. Liggett Group Inc., Case No. 97-03949-CA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 07/10/97). One individual suing. Liggett is the only defendant in this case. The case is dormant.

Morgan v. Brown & Williamson Tobacco Co., et al., Case No. 02-CA-007084, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 08/02/02). One individual suing on behalf of the estate and survivors of a deceased smoker.

Rawls v. Liggett Group Inc., Case No. 97-01354-CA, Circuit Court of the 4^th Judicial Circuit, Duval County (case filed 03/06/97). One individual suing. Liggett is the only defendant in this case. The case is dormant.

Quinn v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-004768, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 05/19/03). One individual suing.

Schuman v. R.J. Reynolds, et al., Case No. 04-CA-009409, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 10/18/04). One individual suing on behalf of the estate and survivors of a deceased smoker.

Shaw v. R.J. Reynolds, et al., Case No. 05-CA-002863, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 03/30/05). One individual suing on behalf of the estate and survivors of a deceased smoker.

Sheehan v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-004768, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 11/02/01). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Shirah v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-001589, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 02/13/03). One individual suing on behalf of the estate and survivors

7

of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Spivak v. Philip Morris Inc., et al., Case No. 08-19309 (AH), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 06/26/08).  One individual suing as personal representative of the estate and survivors of a deceased smoker.

Spry, et al. v. Liggett Group LLC, et al., Case No. 06-31216 CICI, Circuit Court of the 7^th Judicial Circuit, Volusia County (case filed 07/27/06). Two individuals suing.

Stafford v. Brown & Williamson Tobacco Co., et al., Case No. 97-CA-007732, Circuit Court of the 6^th Judicial Circuit, Pinellas County (case filed 11/14/97). One individual suing on behalf of the estate and survivors of a deceased smoker.

Swindells v. R.J. Reynolds, et al., Case No. 06-CA-007837, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 09/01/06). One individual suing.

Ward v. Brown & Williamson Tobacco Co., et al., Case No. 03-CA-008480, Hillsborough County (case filed 09/11/03). One individual suing.

Weldon v. R.J. Reynolds, et al., Case No. 04-CA-002530, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 03/15/04). One individual suing on behalf of the estate and survivors of a deceased smoker. In January 2008, plaintiff filed a motion to amend the complaint alleging that plaintiff is a member of the Engle class. There has been no further activity in the case.

Williams v. R.J. Reynolds, et al., Case No. 06-CA-007430, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 08/22/06). One individual suing on behalf of the estate and survivors of a deceased smoker.

Witt v. Brown & Williamson Tobacco Co., et al., Case No. 04-CA-008530, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 09/21/04). One individual suing.

Louisiana

Dimm, et al. v. R.J. Reynolds, et al., Case No. 53919, Circuit Court of the 18^th Judicial District Court, Iberville Parish (case filed 07/25/00).  Seven individuals suing.  The case was dismissed at the trial court level as abandoned.  Plaintiff filed an appeal, and briefing is underway.

Oser v. The American Tobacco Co., et al., Case No. 97-9293, Circuit Court of the Civil District Court, Parish of Orleans (case filed 05/27/97). One individual suing.

Reese, et al. v. R. J. Reynolds, et al., Case No. 2003-12761, Circuit Court of the 22^nd Judicial District Court, St. Tammany Parish (case filed 06/10/03). Five individuals suing.

Maryland

Culotta, et al., v. Union Carbide Corporation, et al., Case No. 24-X-12-000690, Circuit Court, Baltimore City (case filed 06/20/13). On individual suing. Plaintiffs seek damages allegedly caused to decedent by exposure to asbestos and cigarette smoke, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants, including Liggett.

Fales Jr., et al., v. John Crane-Houdaille, Inc., et al., Case No. 24-X-11-000326, Circuit Court, Baltimore City (case filed 06/10/13). One individual suing. Plaintiff is the surviving child of decedent Lolita Fales. Plaintiff

8

seeks damages allegedly caused to decedent by exposure to asbestos and cigarette smoke, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants, including Liggett.

Missouri

Nuzum, et al. v. Brown & Williamson Tobacco Corporation, et al., Case No. 03-cv-237237, Circuit Court, Jackson County (case filed 05/21/03). Two individuals suing.

New York

Aponte, et al. v. Liggett Group Inc., et al., Case No. 13CIV569, Southern District of New York, U.S. District Court, NY (case filed 01/25/13). One individual suing. A motion to dismiss was filed in May 2013.

Brantley v. The American Tobacco Company, et al., Case No. 114317/01, Supreme Court of New York, New York County (case filed 07/23/01). One individual suing. The case was stayed by stipulation of the parties.

Debobes v. The American Tobacco Company, et al., Case No. 29544/92, Supreme Court of New York, Nassau County (case filed 10/17/97). One individual suing.

Hausrath, et al. v. Liggett Group LLC, Case No. I2001-09526, Supreme Court of New York, Erie County (case filed 01/24/02). Two individuals suing. Liggett is the only defendant. In July 2013, the court granted plaintiffs' motion to restore the case to the active docket calendar.

James v. The American Tobacco Company, et al., Case No. 103034/02, Supreme Court of New York, New York County (case filed 04/04/97). One individual suing.

Shea, et al. v. The American Tobacco Company, et al., Case No. 008938/03, Supreme Court of New York, Nassau County (case filed 10/17/97). Two individuals suing. In December 2008, the trial court granted defendants' motion to dismiss plaintiffs' claims for punitive damages as barred by the prior settlement with the New York Attorney General, but denied the defendants' motion to dismiss the case. The dismissal of the punitive damages claim was affirmed by the intermediate appellate court in May 2010. Plaintiffs' motion to reargue the decision was denied by the appellate court.

Standish v. The American Tobacco Company, et al., Case No. 18418-97, Supreme Court of New York, Bronx County (case filed 07/28/97). One individual suing.

Tomasino, et al. v. The American Tobacco Company, et al., Case No. 027182/97, Supreme Court of New York, Nassau County (case filed 09/23/97). Two individuals suing. In June 2009, the trial court granted defendants' motion to dismiss plaintiffs' claims for punitive damages as barred by the prior settlement with the New York Attorney General, but denied the defendants' motion to dismiss the case. The dismissal of the punitive damages claim was affirmed by the intermediate appellate court in May 2010.  Plaintiffs' motion to reargue the decision was denied by the appellate court.

Yedwabnick v. The American Tobacco Company, et al., Case No. 20525/97, Supreme Court of New York, Queens County (case filed 09/19/97). One individual suing.

Ohio

Croft, et al. v. Akron Gasket & Packing, et al., Case No. CV04541681, Court of Common Pleas, Cuyahoga County (case filed 08/25/05). Two individuals suing.

9

West Virginia

Brewer, et al. v. The American Tobacco Company, et al., Case No. 01-C-82, Circuit Court, Ohio County (case filed 03/20/01). Two individuals suing.

Little v. The American Tobacco Company, et al., Case No. 01-C-235, Circuit Court, Ohio County (case filed 06/04/01). One individual suing.

II.CLASS ACTION CASES

A. Smoking Related.

In Re: Tobacco Litigation (Personal Injury Cases), Case No. 00-C-5000, Circuit Court, West Virginia, Ohio County (case filed 01/18/00). Although not technically a class action, the court consolidated approximately 750 individual smoker actions that were pending prior to 2001 for trial on some common related issues. Liggett was severed from trial of the consolidated action. Trial against the other defendants commenced in June 2010 and ended in a mistrial. The rescheduled trial commenced in October 2011 and it, too, ended in a mistrial. A new trial commenced April 15, 2013. On May 15, 2013, the jury rejected all but one of the plaintiffs' claims, finding in favor of plaintiffs on the claim that ventilated filter cigarettes between 1964 and July 1, 1969 should have included instructions on how to use them. The issue of damages was reserved for further proceedings not yet scheduled.

Parsons, et al. v. A C & S Inc., et al., Case No. 98-C-388, Circuit Court, West Virginia, Ohio County (case filed 02/09/98). This class action is brought on behalf of plaintiff's decedent and all West Virginia residents who allegedly have personal injury claims arising from their exposure to cigarette smoke and asbestos fibers. The complaint seeks to recover unspecified compensatory and punitive damages for all potential members of the class. The plaintiff alleges that Mrs. Parsons' use of tobacco products and exposure to asbestos products caused her to develop lung cancer and to become addicted to tobacco. The case is stayed as a result of the December 2000 bankruptcy petitions filed by three defendants (Nitral Liquidators, Inc., Desseaux Corporation of North America and Armstrong World Industries) in the United States Bankruptcy Court for the District of Delaware.

Young, et al. v. American Brands Inc., et al., Case No. 97-19984cv, Civil District Court, Louisiana, Orleans Parish (case filed 11/12/97). This purported personal injury class action is brought on behalf of plaintiff and all similarly situated residents in Louisiana who, though not themselves cigarette smokers, have been exposed to secondhand smoke from cigarettes which were manufactured by the defendants, and who suffered injury as a result of that exposure. The class has not been certified. The plaintiffs seek to recover an unspecified amount of compensatory and punitive damages. In October 2004, the trial court stayed this case pending the outcome of an appeal in Scott v. American Tobacco Co. The Scott case is now final. Liggett was not a party in the Scott case. There is currently no activity in the case.

B. Price Fixing.

Smith, et al. v. Philip Morris, Inc., et al., Case No. 00-cv-26, District Court, Kansas, Seward County (case filed 02/07/00). In this class action, plaintiffs allege that defendants conspired to fix, raise, stabilize, or maintain prices for cigarettes in Kansas. The court granted class certification in November 2001.  In November 2010, defendants filed a motion for summary judgment. In addition to joining that summary judgment motion, Liggett filed a summary judgment motion in June 2011. In March 2012, the court granted the defendants' motions and dismissed the plaintiffs' claims with prejudice. In July 2012, plaintiffs noticed an appeal. Briefing is underway.

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III.HEALTH CARE COST RECOVERY ACTIONS

Crow Creek Sioux Tribe v. The American Tobacco Company, et al., Case No. cv-97-09-082, Tribal Court of the Crow Creek Sioux Tribe, South Dakota (case filed 09/26/97). The plaintiff seeks to recover actual and punitive damages, restitution, funding of a clinical cessation program, funding of a corrective public education program and disgorgement of unjust profits from alleged sales to minors. The case is dormant.

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XML

Investments and Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

INVESTMENTS AND FAIR VALUE MEASUREMENTS

INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company's recurring financial assets and liabilities subject to fair value measurements are as follows:

	Fair Value Measurements as of June 30, 2013
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	219,533	$	219,533	$	—	$	—
Certificates of deposit	2,234		—		2,234		—
Bonds	7,577		7,577		—		—
Investment securities available for sale							—
Equity securities	86,691		79,947		6,744		—
Fixed income securities
U.S. Government securities	10,094		—		10,094		—
Corporate securities	30,031		—		30,031		—
U.S. mortgage backed securities	589		—		589		—
Commercial mortgage-backed securities	5,886		—		5,886		—
U.S. asset backed securities	850		—		850		—
Total fixed income securities	47,450		—		47,450		—
Warrants	806		—		—		806
Total	$	364,291	$	307,057	$	56,428	$	806
Liabilities:
Fair value of derivatives embedded within convertible debt	166,629		—		—		166,629
Total	$	166,629	$	—	$	—	$	166,629

	Fair Value Measurements as of December 31, 2012
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	372,718	$	372,718	$	—	$	—
Certificates of deposit	2,240		—		2,240		—
Bonds	6,306		6,306		—		—
Investment securities available for sale:
Equity securities	69,984		69,107		877		—
Warrants	769		—		—		769
Total	$	452,017	$	448,131	$	3,117	$	769
Liabilities:
Fair value of derivatives embedded within convertible debt	172,128		—		—		172,128
Total	$	172,128	$	—	$	—	$	172,128

The fair value of the Level 2 certificates of deposit are based on prices posted by the financial institutions. The fair value of investment securities available for sale included in Level 1 are based on quoted market prices from various stock exchanges. The Level 2 investment securities available for sale are equity securities based on quoted market prices of securities that are thinly traded and debt securities based on evaluated prices using observable, market-based inputs.

The fair value of derivatives embedded within convertible debt was derived using a valuation model and have been classified as Level 3. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads based upon the implied debt rate of the 7.5% Convertible Notes to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt are presented on the Condensed Consolidated Statements of Operations.

The value of the embedded derivatives is contingent on changes in implied interest rates of the convertible debt, the Company's stock price, stock volatility as well as projections of future cash and stock dividends over the term of the debt.  The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on the Company's 2019 Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by the Company's stock price, convertible bond trading price, risk free interest rates and stock volatility. 

The Company recognized income of $5,499 and charges of $27,060 for the six months ended June 30, 2013 and 2012, respectively.

The fair value of the warrants was derived using the Black-Scholes model and has been classified as Level 3. The assumptions used under the Black-Scholes model in computing the fair value of the warrants are based on contractual term of the warrants, volatility of the underlying stock based on the historical quoted prices of the underlying stock, assumed future dividend payments and a risk-free rate of return.

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at June 30, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	806	Option model	Stock price	$	1.54
				Exercise price	$	1.68
				Term (in years)	4.4
				Volatility	95.19		%
				Dividend rate	—
				Risk-free return	0.64		%
Fair value of derivatives embedded within convertible debt	$	166,629	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.22
				Convertible trading price	117.94		%
				Volatility	18		%
				Implied credit spread	8% - 9% (8.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2012:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2012		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	769	Option model	Stock price	$	1.40
				Exercise price	$	1.68
				Term (in years)	3.8
				Volatility	76.87		%
				Dividend rate	—
				Risk-free return	0.50		%
Fair value of derivatives embedded within convertible debt	$	172,128	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	14.87
				Convertible trading price	109.00		%
				Volatility	18		%
				Implied credit spread	10% - 11% (10.5%)

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of June 30, 2013 and December 31, 2012, respectively.

XML

New Valley LLC Schedule of Consolidated Real Estate Investments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investment Holdings [Line Items]
Investment in consolidated real estate businesses, net	$ 23,200	$ 13,295
New Valley LLC [Member]
Investment Holdings [Line Items]
Investment in consolidated real estate businesses, net	23,200	13,295
New Valley LLC [Member] | Escena [Member]
Investment Holdings [Line Items]
Investment in consolidated real estate businesses, net	13,139	13,295
New Valley LLC [Member] | Indian Creek [Member]
Investment Holdings [Line Items]
Investment in consolidated real estate businesses, net	$ 10,061	$ 0

XML

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Revenues	$ 249,120	[1]	$ 276,594	[1]	$ 489,522	[1]	$ 534,200	[1]
Expenses:
Cost of goods sold	180,430	[1]	211,752	[1]	353,386	[1]	411,933	[1]
Operating, selling, administrative and general expenses	24,450		23,914		48,800		47,893
Operating income	44,240		40,928		87,336		74,374
Other income (expenses):
Interest expense	(32,086)		(26,509)		(65,462)		(52,761)
Loss on extinguishment of debt	0		0		(21,458)		0
Change in fair value of derivatives embedded within convertible debt	2,450		(6,003)		5,499		(27,060)
(Loss) gain on sale of investment securities available for sale	(197)		0		5,209		0
Other, net	1,471		583		2,280		515
Income (loss) before provision for income taxes	23,528		5,128		21,512		(6,054)
Income tax expense (benefit)	10,017		1,233		9,682		(2,259)
Net income (loss)	13,511		3,895		11,830		(3,795)
Net income (loss) attributed to non-controlling interest	0		0		0		0
Net income (loss) attributed to Vector Group Ltd.	13,511		3,895		11,830		(3,795)
Per basic common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd. (dollars per share)	$ 0.15		$ 0.05		$ 0.13		$ (0.05)
Per diluted common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd. (dollars per share)	$ 0.15		$ 0.05		$ 0.13		$ (0.05)
Cash distributions and dividends declared per share (dollars per share)	$ 0.40		$ 0.38		$ 0.80		$ 0.76
Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	6,804		5,232		7,285		8,095
Equity income (loss) on long-term investments	6,804		5,232		7,285		8,095
Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	846		(1,215)		823		(1,329)
Equity income (loss) on long-term investments	846		(1,215)		823		(1,329)
(Loss) gain on sale of investment securities available for sale	$ (197)

[1] Revenues and Cost of goods sold include excise taxes of $112,596, $130,967, $221,507 and $252,892, respectively.

XML

Inventories

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories consist of:

	June 30, 2013			December 31, 2012
Leaf tobacco	$	48,425		$	59,130
Other raw materials	4,534			3,151
Work-in-process	396			210
Finished goods	68,916			64,396
Inventories at current cost	122,271			126,887
LIFO adjustments	(25,510		)	(26,495		)
	$	96,761		$	100,392

The Company has a leaf inventory management program whereby, among other things, it is committed to purchase certain quantities of leaf tobacco. The purchase commitments are for quantities not in excess of anticipated requirements and are at prices, including carrying costs, established at the commitment date. At June 30, 2013, Liggett had tobacco purchase commitments of approximately $35,255.

All of the Company's inventories at June 30, 2013 and December 31, 2012 have been reported under the LIFO method.

XML

Investment Securities Available for Sale (Tables)

6 Months Ended

Jun. 30, 2013

Available-for-sale Securities [Abstract]

Available-for-sale Securities

The components of investment securities available for sale at June 30, 2013 were as follows:

	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Equity securities	$	52,921	$	34,700	$	(930	)	$	86,691
Fixed income securities	47,638		350		(538		)	47,450
Total investment securities available for sale	$	100,559	$	35,050	$	(1,468	)	$	134,141

Schedule of Maturity Dates of Fixed Income Securities

The table below summarizes the maturity dates of fixed income securities at June 30, 2013.

Fixed Interest by Maturity:	Cost		Fair Value
Under 1 Year	$	497	$	496
1 Year up to 5 Years	33,760		33,394
5 Year up to 10 Years	1,535		1,514
More than 10 Years	11,846		12,046
Total	$	47,638	$	47,450

XML

Investments and Fair Value Measurements Fair Value Inputs, Quantitative Information (Details) (Significant Unobservable Inputs (Level 3), Fair Value, Measurements, Recurring [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 years	Dec. 31, 2012 years
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	$ 806	$ 769
Fair value of derivatives embedded within convertible debt	166,629	172,128
Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	806	769
Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair value of derivatives embedded within convertible debt	$ 166,629	$ 172,128
Warrants | Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 1.54	$ 1.40
Exercise price (dollars per share)	$ 1.68	$ 1.68
Term (in years)	4.4	3.8
Volatility	95.19%	76.87%
Dividend rate	0.00%	0.00%
Risk-free return	0.64%	0.50%
Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 16.22	$ 14.87
Volatility	18.00%	18.00%
Assumed annual stock dividend	5.00%	5.00%
Assumed annual cash dividend (dollars per share)	$ 1.60	$ 1.60
Convertible trading price	117.94%	109.00%
Implied credit spread	8.50%	10.50%
Minimum [Member] | Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Implied credit spread	8.00%	10.00%
Maximum [Member] | Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Implied credit spread	9.00%	11.00%

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Ladenburg Thalmann Financial Services Inc. Ladenburg Thalmann Financial Services Inc.

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Ladenburg Thalmann Financial Services Inc.

LADENBURG THALMANN FINANCIAL SERVICES INC.

Vector presently beneficially owns approximately 8.1% of Ladenburg Thalmann Financial Services Inc. ("LTS"). Vector lent $15,000 to LTS in November 2011. In May and June 2013, LTS paid Vector $8,433 of principal plus related interest on the loan. In connection with the principal reduction, the Company recognized $552 of interest income related to the acceleration of the amortization of note discount. As of June 30, 2013, the outstanding principal balance on the loan to LTS was $6,567.

On May 22, 2013, Vector purchased 240,000 shares of LTS 8% Series A Cumulative Redeemable Preferred Stock (Liquidation Preference $25.00 Per Share) ("LTS-A") for $6,000. LTS will pay a monthly cumulative dividend of 8% on the LTS-A on a monthly basis. LTS, at its option, may redeem any or all of the LTS-A at $25.00 per share plus any accumulated and unpaid dividends on or after May 24, 2018. As of June 30, 2013, the LTS-A investment was included in "Investment securities available for sale" and had a carrying value of $6,007 in Vector's Condensed Consolidated Balance Sheet..

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Contingencies MSA and Other State Settlement Agreements (Details) (USD $)			1 Months Ended	6 Months Ended		6 Months Ended	3 Months Ended		1 Months Ended	25 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended	78 Months Ended			3 Months Ended				12 Months Ended			1 Months Ended			6 Months Ended		6 Months Ended				6 Months Ended
	Jun. 30, 2013 Liggett and Vector Tobacco [Member]	Jun. 30, 2013 Liggett [Member]	Jul. 31, 2000 Engle Progeny Cases [Member]	Jun. 30, 2013 Engle Progeny Cases [Member] Liggett [Member] cases	Jun. 30, 2013 Engle Progency Cases Excluding Lukacs [Member] Liggett [Member] cases	Jun. 30, 2013 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]	Jun. 30, 2013 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett and Vector Tobacco [Member]	Dec. 31, 2012 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett and Vector Tobacco [Member]	Nov. 30, 1998 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett [Member] states	Mar. 31, 1998 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett [Member] states	Jun. 30, 2013 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett [Member]	Jun. 30, 2013 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Vector Tobacco [Member]	Jun. 30, 2013 MSA Paid into Disputed Account [Member] Liggett and Vector Tobacco [Member]	Jun. 30, 2013 MSA Amount Witheld [Member] Liggett and Vector Tobacco [Member]	Jun. 30, 2013 Master Settlement Agreement [Member]	Nov. 30, 1998 Master Settlement Agreement [Member] Liggett [Member] states	Jun. 30, 2013 NPM Adjustment [Member]	Jun. 30, 2013 NPM Adjustment [Member]	Dec. 31, 2003 NPM Adjustment [Member] courts	Sep. 30, 2012 NPM Adjustment [Member] states	Dec. 17, 2012 NPM Adjustment [Member] states	Nov. 30, 2011 NPM Adjustment [Member] states	Jun. 30, 2013 NPM Adjustment [Member] Liggett and Vector Tobacco [Member]	Mar. 31, 2013 NPM Adjustment [Member] Liggett and Vector Tobacco [Member]	Jun. 30, 2013 NPM Adjustment [Member] Liggett [Member]	Jun. 30, 2013 Gross Versus Net Dispute [Member] Liggett [Member]	Dec. 31, 2003 Minnesota Settlement [Member] Liggett [Member]	Dec. 31, 2010 Florida Settlement [Member] Liggett [Member]	Jun. 30, 2013 Florida Settlement [Member] Liggett [Member] years	Mar. 31, 2010 Lukacs case [Member] Liggett [Member]	Nov. 30, 2008 Lukacs case [Member] Liggett [Member]	Jun. 30, 2002 Lukacs case [Member] Liggett [Member]	Jun. 30, 2013 Lukacs case [Member] Liggett [Member]	Feb. 29, 2012 Mississippi Settlement [Member] Liggett [Member]	Jun. 30, 2013 Calloway v RJ Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Minimum [Member] Engle Progency Cases Excluding Lukacs [Member] Liggett [Member]	Jun. 30, 2013 Minimum [Member] NPM Adjustment [Member] Liggett [Member]	Jun. 30, 2013 Minimum [Member] Florida Settlement [Member] Liggett [Member] years	Jun. 30, 2013 Maximum [Member] Engle Progency Cases Excluding Lukacs [Member] Liggett [Member]	Jun. 30, 2013 Maximum [Member] Master Settlement Agreement [Member] sponsorships	Jun. 30, 2013 Maximum [Member] NPM Adjustment [Member] Liggett [Member]	Jun. 30, 2013 Maximum [Member] Florida Settlement [Member] Liggett [Member] years
Loss Contingencies [Line Items]
Number of States									46	45
Number of brand name sponsorships allowed																																								1
Brand Name Sponsorship Period															12 months
Annual payment requirement						$ 9,000,000,000		$ 138,900,000																			$ 100,000	$ 250,000
MSA Payment Obligations											0	0
Payment obligations											1.65%	0.28%													1.25%												1.63%				1.645%
Total cigarettes sold	3.50%
Settlement payment			145,000,000,000	1,146,000			(30,800,000)	(105,000,000)					(18,700,000)	(3,100,000)														1,200,000			24,835,000	37,500,000	12,418,000		1,947,000	1,000			3,008,000
Amounts not expensed by the Company																			1,200,000,000
Aggregate number of settling states																				49
Courts That Did Not Rule																			1
Courts that decided the issue																			48
Settling States																			45
Allocable Share of Settling States																	80.00%	80.00%	90.00%
Reduction of any Potential 2003 NPM Adjustment																	20.00%	20.00%
Number of settling states with diligent enforcement not contested																					20	16
Gain (loss) related to litigation settlement																	1,345,000	6,947,000					1,345,000	5,602,000						14,361,000
Maximum loss exposure		36,200,000		85,000,000	16,371,000																				38,800,000	16,200,000
Future MSA payments if method of calculation is changed																									2,500,000
Number of states not included in settlement agreement																4
Years Annual Payments Required																													21
Years Annual Payments Required That Are Subject To Inflation Adjustment																																						12				21
Accrued expense for this matter																							27,600,000			9,300,000		3,200,000
Amount Remaining in Disputed Payment Accounts																							16,600,000
Term of Notice from State																																		60 days
Plaintiffs Verdicts				10	9
Punitive damages																																			7,600,000
Proposed Settlement																										$ 8,000

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Ladenburg Thalmann Financial Services Inc. (Details) (USD $) In Thousands, except Share data, unless otherwise specified			0 Months Ended		3 Months Ended		0 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	May 22, 2013 Ladenburg Thalmann Financial Services [Member]	Jun. 30, 2013 Ladenburg Thalmann Financial Services [Member]	Jun. 30, 2013 Loans [Member] Ladenburg Thalmann Financial Services [Member]	Nov. 04, 2011 Loans [Member] Ladenburg Thalmann Financial Services [Member]	May 22, 2013 Class A Cumulative Redeemable Preferred Stock [Member] Ladenburg Thalmann Financial Services [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Stock Ownership In Company Percentage					8.10%
Related Party Transaction, Management Loan Agreement Portion Attributable to Company						$ 15,000
Related Party Transaction, Principal and Interest Income From Loan					8,433
Related Party Transaction, Interest Income Recognized					552
Related Party Transaction, Due from (to) Related Party					6,567
Shares purchased							240,000
Interest Rate							8.00%
Liquidation preference							$ 25.00
Related party expense			6,000
Investment securities available for sale	$ 134,141	$ 69,984		$ 6,007

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventories [Line Items]
Leaf tobacco	$ 48,425	$ 59,130
Other raw materials	4,534	3,151
Work-in-process	396	210
Finished goods	68,916	64,396
Inventories at current cost	122,271	126,887
LIFO adjustments	(25,510)	(26,495)
Inventory, Net	96,761	100,392
Leaf tobacco [Member]
Inventories [Line Items]
Leaf tobacco purchase commitments	$ 35,255

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Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Contingencies [Abstract]

Cases Pending by State

The following table lists the number of Individual Actions, by state, that are pending against Liggett or the Company as of June 30, 2013:

State	Number of Cases
Florida	45
New York	9
Louisiana	3
Maryland	2
West Virginia	2
Missouri	1
Ohio	1

Schedule of Judgments Entered

As of June 30, 2013, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Net Compensatory Damages	Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Affirmed by the Third District Court of Appeal. Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Affirmed by the Second District Court of Appeal. In March 2013, the Florida Supreme Court affirmed. Liggett intends to file a petition for writ of certiorari to the US Supreme Court.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
April 2010	Putney v. R.J. Reynolds	Broward	$3,008	None	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings. Plaintiff filed a motion for rehearing.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	On appeal to the Fourth District Court of Appeal. Oral argument occurred on June 19, 2013. A decision is pending.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	A joint and several judgment for $487 was entered against Liggett and RJR. On appeal to the First District Court of Appeal. Oral argument occurred on July 17, 2013.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against all defendants. On appeal to the Fourth District Court of Appeal.
December 2012	Buchanan v. R.J. Reynolds	Leon	$2,035	None	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. On appeal to the First District Court of Appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court on June 24, 2013.

Schedule of Loss Contingencies

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2013 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement			Litigation Accruals			Total
Balance at January 1, 2013	$	32,970		$	1,470		$	34,440		$	52,639		$	1,862		$	54,501
Expenses	56,907			147			57,054			—			—			—
NPM Settlement adjustment	—			—			—			(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	364			—			364			—			—			—
Payments	(34,077		)	(1,577		)	(35,654		)	—			—			—
Reclassification from non-current liabilities	3,521			223			3,744			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			18			18			—			99			99
Balance as of June 30, 2013	$	59,685		$	281		$	59,966		$	35,630		$	1,738		$	37,368

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2012 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement		Litigation Accruals			Total
Balance at January 1, 2012	$	51,174		$	1,551		$	52,725		$	49,338	$	1,600		$	50,938
Expenses	69,956			179			70,135			—		—			—
Change in MSA obligations capitalized as inventory	173			—			173			—		—			—
Payments	(50,094		)	(574		)	(50,668		)	—		—			—
Reclassification from non-current liabilities	(905		)	224			(681		)	905		(224		)	681
Interest on withholding	—			24			24			1,172		385			1,557
Balance as of June 30, 2012	$	70,304		$	1,404		$	71,708		$	51,415	$	1,761		$	53,176

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Notes Payable, Long Term Debt and Other Obligations (Tables)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Notes payable, long-term debt and other obligations

Notes payable, long-term debt and other obligations consist of:

	June 30, 2013			December 31, 2012
Vector:
7.75% Senior Secured Notes due 2021	$	450,000		$	—
11% Senior Secured Notes due 2015, net of unamortized discount of $0 and $408	—			414,592
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383*	24,117			19,617
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038*	70,884			62,492
3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107*	7,224			7,115
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795*	70,991			68,205
Liggett:
Revolving credit facility	27,034			29,430
Term loan under credit facility	4,032			4,179
Equipment loans	14,211			17,810
Other	3,765			284
Total notes payable, long-term debt and other obligations	672,258			623,724
Less:
Current maturities	(33,906		)	(36,778		)
Amount due after one year	$	638,352		$	586,946

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($9,007 at June 30, 2013 and $11,682 at December 31, 2012, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($17,075 at June 30, 2013 and $22,146 at December 31, 2012, respectively), the 3.875% Variable Interest Senior Convertible Debentures ($42,985 at June 30, 2013 and $39,714 at December 31, 2012, respectively), and the 7.50% Variable Interest Senior Convertible Debentures ($97,562 at June 30, 2013 and $98,586 at December 31, 2012, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

Components of non-cash interest expense

Components of non-cash interest expense are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Amortization of debt discount	$	8,464	$	4,004	$	15,812	$	7,441
Amortization of deferred finance costs	447		751		1,044		1,461
Loss on extinguishment of 11% Senior Secured Notes	—		—		3,638		—
Accelerated interest expense on 3.875% Variable Interest Senior Convertible Debentures converted	—		7,888		—		7,888
	$	8,911	$	12,643	$	20,494	$	16,790

Fair Value of Notes Payable and Long-term Debt

Fair Value of Notes Payable and Long-term Debt:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	672,258	$	1,030,462	$	623,724	$	963,672

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Notes Payable, Long Term Debt and Other Obligations (Textuals) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended						1 Months Ended	6 Months Ended		6 Months Ended			6 Months Ended		1 Months Ended			0 Months Ended		6 Months Ended					6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Jun. 30, 2013 Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Jun. 30, 2013 Liggett [Member] Line of Credit [Member] Revolving Credit and Term Loan Facility [Member]	Feb. 29, 2012 Liggett [Member] Line of Credit [Member] Revolving Credit Facility [Member]	Jun. 30, 2013 Liggett [Member] Line of Credit [Member] Revolving Credit Facility [Member]	Dec. 31, 2012 Liggett [Member] Line of Credit [Member] Revolving Credit Facility [Member]	Jun. 30, 2013 Liggett [Member] Line of Credit [Member] Term Loan Under Credit Facility [Member]	Dec. 31, 2012 Liggett [Member] Line of Credit [Member] Term Loan Under Credit Facility [Member]	Feb. 21, 2012 Liggett [Member] Line of Credit [Member] Term Loan Under Credit Facility [Member]	Jun. 30, 2013 Vector [Member]	Jun. 30, 2012 Vector [Member]	Feb. 28, 2013 Vector [Member] Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Jun. 30, 2013 Vector [Member] Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Dec. 31, 2012 Vector [Member] Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Feb. 12, 2013 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Jan. 29, 2013 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Jun. 30, 2013 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Mar. 14, 2013 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Feb. 13, 2013 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Dec. 31, 2012 Vector [Member] Secured Debt [Member] 11% Senior Secured Notes Due 2015 [Member]	Jun. 30, 2013 Vector [Member] Secured Debt [Member] Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]	Jun. 30, 2013 Vector [Member] Convertible Debt [Member] Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]	Dec. 31, 2012 Vector [Member] Convertible Debt [Member] Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]	Jun. 30, 2012 Vector [Member] Convertible Debt [Member] Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]	Feb. 29, 2012 Vector [Member] Convertible Debt [Member] Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]	Jun. 30, 2013 Wells Fargo Adjusted Eurodollar Rate [Member] Liggett [Member] Line of Credit [Member] Term Loan Under Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility maximum borrowing capacity									$ 50,000	$ 50,000
Days of notice required to terminate credit facility									30 days
Basis spread on variable rate										2.00%																					1.75%
Minimum Ebitda Ratio On Trailing Twelve Month Basis If Excess Availability Is Less Than 20000 Thousand										100,000
Excess availability in credit facility threshold										20,000
Capital expenditure requirement, maximum carryover amount										2,500
Maximum Capital Expenditures Allowed Before Maximum Carryover Amount of 2500 Thousand										15,000
Debt amount														5,600							415,000		78,685						31,370	2
Long-term debt	672,258		672,258		623,724					27,034	29,430	4,032	4,179	4,425				450,000	0			0			414,592		7,224	7,115
Periodic payment amount												25
Total periodic payments over the term of the loan												885
Outstanding principal after total future periodic payments												3,540
Line of Credit Facility amount outstanding								31,066
Line of Credit Facility remaining borrowing capacity								18,934
Principal amount of debt sold																	450,000
Interest Rate						7.75%	11.00%										7.75%					11.00%				3.875%
Debt redemption price as a percentage of principal amount																	107.75%						103.667%	103.667%
Proceeds from debt issuance			453,080	14,018											450,000	0	438,250
Extinguishment of debt																				336,315	336,315	17,820
Debt instrument, premium percentage																				104.292%	104.292%
Debt Instrument, percent of principal																	35.00%
Mandatory Redemption Percent In Event Of Change In Control																	101.00%
Subsidiary Guarantors, Percentage Ownership																	100.00%
Maximum Term to Consummate Registered Exchange Offer																	360 days
Covenant, Indenture Threshold for Earnings for Payment of Dividends																	75,000
Covenant, Leverage Ratio Requirement																	3.0
Covenant, Secured Leverage Ratio Requirement																	1.5
Loss on extinguishment of debt	0	0	(21,458)	0											(21,458)							(21,458)
Accelerated interest expense	0	7,888	0	7,888																		3,638					7,888
Shares issued upon conversion																													2,053,065	131
Debt reclassified from debt to equity																											31,372
Debentures outstanding																											$ 67,628

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Summary of Significant Accounting Policies Basic and Diluted Earnings Per Share, Shares (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accounting Policies [Abstract]
Weighted-average shares for basic EPS	86,826,428	83,345,002	86,824,463	83,179,283
Plus incremental shares related to stock options and non-vested restricted stock	206,562	203,118	195,925	0
Weighted-average shares for basic and fully diluted EPS	87,032,990	83,548,120	87,020,388	83,179,283

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Investment Securities Available for Sale (Details 2) (Fixed income securities, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Fixed income securities
Cost
Under 1 Year	$ 497
1 Year up to 5 Years	33,760
5 Year up to 10 Years	1,535
More than 10 Years	11,846
Fair Value
Under 1 Year	496
5 Year up to 10 Years	33,394
5 Year up to 10 Years	1,514
More than 10 Years	$ 12,046

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Contingencies Litigation Accrual Rollforward (Details) (USD $) In Thousands, unless otherwise specified			6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Current Liabilities [Member]	Jun. 30, 2012 Current Liabilities [Member]	Jun. 30, 2013 Current Liabilities [Member] Master Settlement Agreement [Member]	Jun. 30, 2012 Current Liabilities [Member] Master Settlement Agreement [Member]	Jun. 30, 2013 Current Liabilities [Member] Pending Litigation [Member]	Jun. 30, 2012 Current Liabilities [Member] Pending Litigation [Member]	Jun. 30, 2013 Non-Current Liabilities [Member]	Jun. 30, 2012 Non-Current Liabilities [Member]	Jun. 30, 2013 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Jun. 30, 2012 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Jun. 30, 2013 Non-Current Liabilities [Member] Pending Litigation [Member]	Jun. 30, 2012 Non-Current Liabilities [Member] Pending Litigation [Member]
Loss Contingencies [Line Items]
Payments due under Master Settlement Agreement, Current	$ 59,685	$ 32,970			$ 32,970	$ 51,174
Litigation Accruals, Current							1,470	1,551
Total, Current			34,440	52,725
Payments due under Master Settlement Agreement, Non-Current	35,630	52,639									52,639	49,338
Litigation Accruals, Non-Current	1,738	1,862											1,862	1,600
Total, Non-Current									54,501	50,938
Expenses			57,054	70,135	56,907	69,956	147	179	0	0	0	0	0	0
NPM Settlement Adjustment			0		0		0		(13,489)		(13,489)		0
Change in MSA obligations capitalized as inventory			364	173	364	173	0	0	0	0	0	0	0	0
Payments			(35,654)	(50,668)	(34,077)	(50,094)	(1,577)	(574)	0	0	0	0	0	0
Reclassification to non-current liabilities			3,744	(681)	3,521	(905)	223	224	(3,743)	681	(3,520)	905	(223)	(224)
Interest on withholding			18	24	0	0	18	24	99	1,557	0	1,172	99	385
Payments due under Master Settlement Agreement, Current	59,685	32,970			59,685	70,304
Litigation Accruals, Current							281	1,404
Total, Current			59,966	71,708
Payments due under Master Settlement Agreement, Non-Current	35,630	52,639									35,630	51,415
Litigation Accruals, Non-Current	1,738	1,862											1,738	1,761
Total, Non-Current									$ 37,368	$ 53,176

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Financial information for the company's operations before taxes

Financial information for the Company's operations before taxes for the three and six months ended June 30, 2013 and 2012 follows:

					Real			Corporate
	Tobacco				Estate			and Other			Total
Three months ended June 30, 2013
Revenues	$	249,120			$	—		$	—		$	249,120
Operating income (loss)	48,294		(1	)	(407		)	(3,647		)	44,240
Equity income from non-consolidated real estate businesses	—				6,804			—			6,804
Depreciation and amortization	2,368				152			117			2,637
Three months ended June 30, 2012
Revenues	$	276,594			$	—		$	—		$	276,594
Operating income (loss)	44,590				(249		)	(3,413		)	40,928
Equity income from non-consolidated real estate businesses	—				5,232			—			5,232
Depreciation and amortization	2,383				88			68			2,539
Six months ended June 30, 2013
Revenues	$	489,522			$	—		$	—		$	489,522
Operating income (loss)	95,454		(2	)	(321		)	(7,797		)	87,336
Equity income from non-consolidated real estate businesses	—				7,285			—			7,285
Depreciation and amortization	4,753				280			200			5,233
Capital expenditures	3,319				429			2,247			5,995
Six months ended June 30, 2012
Revenues	$	534,200			$	—		$	—		$	534,200
Operating income (loss)	82,105				272			(8,003		)	74,374
Equity income from non-consolidated real estate businesses	—				8,095			—			8,095
Depreciation and amortization	4,878				173			259			5,310
Capital expenditures	6,334				99			961			7,394

⁽¹⁾ Operating income includes $1,345 of income from a NPM Settlement.

⁽²⁾ Operating income includes $6,947 of income from NPM Settlements.

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Notes Payable, Long Term Debt and Other Obligations (Details) (USD $) In Thousands, unless otherwise specified					6 Months Ended		6 Months Ended				6 Months Ended										6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Vector [Member]	Dec. 31, 2012 Vector [Member]	Jun. 30, 2013 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383	Dec. 31, 2012 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383	Jun. 30, 2013 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038	Dec. 31, 2012 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038	Jun. 30, 2013 3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107	Dec. 31, 2012 3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107	Jun. 30, 2013 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795	Dec. 31, 2012 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795	Jun. 30, 2013 Secured Debt 7.75% Senior Secured Notes due 2021 Vector [Member]	Dec. 31, 2012 Secured Debt 7.75% Senior Secured Notes due 2021 Vector [Member]	Jun. 30, 2013 Secured Debt 11% Senior Secured Notes due 2015, net of unamortized discount of $0 and $408 Vector [Member]	Dec. 31, 2012 Secured Debt 11% Senior Secured Notes due 2015, net of unamortized discount of $0 and $408 Vector [Member]	Jun. 30, 2013 Convertible Debt 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383 Vector [Member]	Dec. 31, 2012 Convertible Debt 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383 Vector [Member]	Jun. 30, 2013 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038 Vector [Member]	Dec. 31, 2012 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038 Vector [Member]	Jun. 30, 2013 Convertible Debt 3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107 Vector [Member]	Dec. 31, 2012 Convertible Debt 3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107 Vector [Member]	Jun. 30, 2013 Convertible Debt 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795 Vector [Member]	Dec. 31, 2012 Convertible Debt 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795 Vector [Member]	Jun. 30, 2013 Line of Credit Revolving credit facility Liggett [Member]	Dec. 31, 2012 Line of Credit Revolving credit facility Liggett [Member]	Jun. 30, 2013 Line of Credit Term loan under credit facility Liggett [Member]	Dec. 31, 2012 Line of Credit Term loan under credit facility Liggett [Member]	Feb. 21, 2012 Line of Credit Term loan under credit facility Liggett [Member]	Jun. 30, 2013 Equipment loans Liggett [Member]	Dec. 31, 2012 Equipment loans Liggett [Member]	Jun. 30, 2013 Other Liggett [Member]	Dec. 31, 2012 Other Liggett [Member]
Debt Instrument [Line Items]
Total notes payable, long - term debt and other obligations	$ 672,258	$ 623,724											$ 450,000	$ 0	$ 0	$ 414,592	$ 24,117	$ 19,617	$ 70,884	$ 62,492	$ 7,224	$ 7,115	$ 70,991	$ 68,205	$ 27,034	$ 29,430	$ 4,032	$ 4,179	$ 4,425	$ 14,211	$ 17,810	$ 3,765	$ 284
Less: Current maturities	(33,906)	(36,778)	0	0
Amount due after one year	638,352	586,946	623,215	572,023
Unamortized Discount															0	408	25,883	30,383	36,646	45,038	35,998	36,107	159,009	161,795
Convertible debt effective interest rate					6.75%		6.75%				7.50%										3.875%
Fair value of the derivatives embedded	$ 166,629	$ 172,128	$ 166,629	$ 172,128	$ 9,007	$ 11,682	$ 17,075	$ 22,146	$ 42,985	$ 39,714	$ 97,562	$ 98,586

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Long Term Investments (Tables)

6 Months Ended

Jun. 30, 2013

Long-term Investments [Abstract]

Long-term investments

Long-term investments accounted for at cost:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	20,540	$	22,648	$	15,540	$	16,962
Real estate partnership	752		1,142		827		1,391
Investments accounted for at cost	$	21,292	$	23,790	$	16,367	$	18,353

Schedule of Equity Method Investments

Long-term investment partnership accounted for under the equity method:

	June 30, 2013		December 31, 2012
Investment partnership	$	6,671	$	6,432

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income (loss)	$ 13,511	$ 3,895	$ 11,830	$ (3,795)
Net unrealized gains (losses) on investment securities available for sale:
Change in net unrealized gains (losses)	2,866	(3,025)	16,904	(14,269)
Net unrealized losses (gains) reclassified into net income	197	0	(5,209)	0
Net unrealized gains (losses) on investment securities available for sale	3,063	(3,025)	11,695	(14,269)
Net unrealized gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	(1,542)	(2,505)	(584)	542
Net unrealized gains reclassified into net income	0	0	0	0
Net unrealized (losses) gains on long-term investments accounted for under the equity method	(1,542)	(2,505)	(584)	542
Net change in forward contracts	16	17	31	32
Net change in pension-related amounts	351	871	702	1,741
Other comprehensive income (loss)	1,888	(4,642)	11,844	(11,954)
Income tax effect on:
Change in net unrealized gains (losses) on investment securities	(1,163)	1,228	(6,863)	5,793
Net unrealized losses (gains) reclassified into net income on investment securities	(80)	0	2,115	0
Change in unrealized (losses) gains on long-term investments	626	1,017	237	(220)
Net unrealized gains reclassified into net income on long-term investments	0	0	0	0
Forward contracts	(6)	(7)	(12)	(13)
Pension-related amounts	(143)	(354)	(285)	(707)
Income tax (provision) benefit on other comprehensive income (loss)	(766)	1,884	(4,808)	4,853
Other comprehensive income (loss), net of tax	1,122	(2,758)	7,036	(7,101)
Total comprehensive income	14,633	1,137	18,866	(10,896)
Less: Comprehensive income attributed to non-controlling interest			0	0
Comprehensive income (loss) attributed to Vector Group Ltd.	$ 14,633	$ 1,137	$ 18,866	$ (10,896)

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement of Cash Flows [Abstract]
Net cash provided by operating activities	$ 5,190	$ 57,829
Cash flows from investing activities:
Sale of investment securities	43,115	0
Purchase of investment securities	(90,368)	(1,148)
Proceeds from sale or liquidation of long-term investments	75	72
Purchase of long-term investments	(5,000)	(5,000)
Investments in non-consolidated real estate businesses	(19,048)	(9,667)
Investments in consolidated real estate businesses	(7,657)	0
Distributions from non-consolidated real estate businesses	0	6,221
Increase in cash surrender value of life insurance policies	(303)	(620)
Increase in restricted assets	(1,268)	(53)
Issuance of notes receivable	0	(234)
Proceeds from sale of fixed assets	13	404
Capital expenditures	(5,995)	(7,394)
Repayments of notes receivable	8,433	0
Net cash used in investing activities	(78,003)	(17,419)
Cash flows from financing activities:
Proceeds from debt issuance	453,080	14,018
Deferred financing costs	(11,663)	(315)
Repayments of debt	(418,833)	(13,493)
Borrowings under revolver	474,493	525,350
Repayments on revolver	(476,888)	(532,082)
Dividends and distributions on common stock	(71,518)	(66,112)
Proceeds from exercise of employee stock options	0	45
Tax benefit of employee stock options exercised	0	4
Net cash used in financing activities	(51,329)	(72,585)
Net decrease in cash and cash equivalents	(124,142)	(32,175)
Cash and cash equivalents, beginning of period	405,855	240,923
Cash and cash equivalents, end of period	$ 281,713	$ 208,748

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Investment Securities Available for Sale

6 Months Ended

Jun. 30, 2013

Available-for-sale Securities [Abstract]

INVESTMENTS SECURITIES AVAILABLE FOR SALE

INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at June 30, 2013 were as follows:

	Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Equity securities	$	52,921	$	34,700	$	(930	)	$	86,691
Fixed income securities	47,638		350		(538		)	47,450
Total investment securities available for sale	$	100,559	$	35,050	$	(1,468	)	$	134,141

The table below summarizes the maturity dates of fixed income securities at June 30, 2013.

Fixed Interest by Maturity:	Cost		Fair Value
Under 1 Year	$	497	$	496
1 Year up to 5 Years	33,760		33,394
5 Year up to 10 Years	1,535		1,514
More than 10 Years	11,846		12,046
Total	$	47,638	$	47,450

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation:

The condensed consolidated financial statements of Vector Group Ltd. (the “Company” or “Vector”) include the accounts of VGR Holding LLC (“VGR Holding”), Liggett Group LLC (“Liggett”), Vector Tobacco Inc. (“Vector Tobacco”), Liggett Vector Brands LLC (“Liggett Vector Brands”), New Valley LLC (“New Valley”) and other less significant subsidiaries. All significant intercompany balances and transactions have been eliminated.

Liggett and Vector Tobacco are engaged in the manufacture and sale of cigarettes in the United States. New Valley is engaged in the real estate business and is seeking to acquire additional operating companies and real estate properties.

The accompanying unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and, in management's opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission. The consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.

Certain reclassifications have been made to the 2012 financial information to conform to the 2013 presentation.

(b) Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statement of stockholders' equity to the extent of retained earnings and accumulated paid-in capital. Any amounts exceeding retained earnings are recorded as a reduction to additional paid-in capital. Any amounts then exceeding accumulated paid-in capital are recorded as an increase to accumulated deficit.

(c) Earnings Per Share (“EPS”):

Information concerning the Company's common stock has been adjusted to give retroactive effect to the 5% stock dividend paid to Company stockholders on September 28, 2012. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

Net income (loss) for purposes of determining basic and diluted EPS was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss) attributed to Vector Group Ltd.	$	13,511		$	3,895		$	11,830		$	(3,795	)
Income attributed to participating securities	(374		)	(79		)	(328		)	—
Net income (loss) available to common stockholders	$	13,137		$	3,816		$	11,502		$	(3,795	)

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Weighted-average shares for basic EPS	86,826,428	83,345,002	86,824,463	83,179,283
Plus incremental shares related to stock options and non-vested restricted stock	206,562	203,118	195,925	—
Weighted-average shares for basic and fully diluted EPS	87,032,990	83,548,120	87,020,388	83,179,283

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and six months ended June 30, 2013 and 2012 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Number of stock options	N/A		N/A		N/A		2,299,640
Weighted-average exercise price	N/A		N/A		N/A		$	13.09
Weighted-average shares of non-vested restricted stock	53,500		3,500		53,500		383,587
Weighted-average expense per share	16.36		$	17.12	$	16.36	$	10.86
Weighted-average number of shares issuable upon   conversion of debt	26,962,402		17,854,218		26,962,402		18,017,309
Weighted-average conversion price	$	15.98	$	14.09	$	15.98	$	14.10

(d) Fair Value of Derivatives Embedded within Convertible Debt:

The Company has estimated the fair market value of the embedded derivatives based principally on the results of a valuation model. The estimated fair value of the derivatives embedded within the convertible debt is based principally on the present value of future dividend payments expected to be received by the convertible debt holders over the term of the debt. The discount rate applied to the future cash flows is estimated based on a spread in the yield of the Company's debt when compared to risk-free securities with the same duration; thus, a readily determinable fair market value of the embedded derivatives is not available. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads for secured to unsecured debt, unsecured to subordinated debt and subordinated debt to preferred stock to determine the fair value of the derivatives embedded within the convertible debt. The valuation also considers other items, including current and future dividends and the volatility of the Company's stock price.  The range of estimated fair market values of the Company's embedded derivatives was between $163,949 and $169,391.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $166,629 as of June 30, 2013. At December 31, 2012, the range of estimated fair market values of the Company's embedded derivatives was between $169,424 and $174,909.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $172,128 as of December 31, 2012.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 5.)

(e) Other Income, Net:

Other income, net consists of:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013		2012
(Loss) gain on warrants	$	(28	)	$	(210	)	$	37	$	(853	)
Interest income	826			499			1,476		1,041
Accretion of interest income of debt discount on notes receivable	588			32			623		63
Gain on long-term investment	142			135			142		135
Other (loss) income	(57		)	127			2		129
Other income, net	$	1,471		$	583		$	2,280	$	515

(f) New Accounting Pronouncements:

In July 2012, the FASB issued amendments to the indefinite-lived intangible asset impairment guidance which provides an option for companies to use a qualitative approach to test indefinite-lived intangible assets for impairment if certain conditions are met. The amendments are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012 (early adoption was permitted). The implementation of the amended accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2013, the FASB issued amendments to the accounting guidance for presentation of comprehensive income to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments do not change the current requirements for reporting net income or other comprehensive income, but do require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where the net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts. For public companies, these amendments are effective prospectively for reporting periods beginning after December 15, 2012. The implementation of the amended accounting guidance did not have a material impact on the Company's consolidated financial statements.

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Long Term Investments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	$ 21,292	$ 16,367
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	21,292	16,367
Total
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	23,790	18,353
Real estate partnership [Member] | Carrying Value [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	752	827
Real estate partnership [Member] | Total | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	1,142	1,391
Investment partnerships [Member] | Carrying Value [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	20,540	15,540
Investment partnerships [Member] | Total | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	$ 22,648	$ 16,962

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income tax expense (benefit)

The Company's income tax expense (benefit) consisted of the following:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Income (loss) before provision for income taxes	$	23,528	$	5,128		$	21,512	$	(6,054	)
Income tax expense (benefit) using estimated annual effective income tax rate	9,575		1,904			8,755		(2,247		)
Changes in effective tax rates	321		98			—		—
Out-of-period adjustment related to non-deductible expenses in 2011	—		—			—		757
Impact of discrete items, net	121		(769		)	927		(769		)
Income tax expense (benefit)	$	10,017	$	1,233		$	9,682	$	(2,259	)

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Condensed Consolidating Financial Information (Tables)

6 Months Ended

Jun. 30, 2013

Condensed Consolidating Financial Information [Abstract]

Schedule of Condensed Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	273,219		$	7,779	$	715	$	—		$	281,713
Investment securities available for sale	83,019			51,122		—		—			134,141
Accounts receivable - trade, net	—			12,257		238		—			12,495
Intercompany receivables	879			—		—		(879		)	—
Inventories	—			96,761		—		—			96,761
Deferred income taxes	28,804			3,213		—		—			32,017
Income taxes receivable, net	44,764			—		—		(28,133		)	16,631
Restricted assets	—			1,241		—		—			1,241
Other current assets	479			4,548		193		—			5,220
Total current assets	431,164			176,921		1,146		(29,012		)	580,219
Property, plant and equipment, net	4,115			53,408		544		—			58,067
Investment in consolidated real estate businesses, net	—			—		23,200		—			23,200
Long-term investments accounted for at cost	20,540			—		752		—			21,292
Long-term investments accounted for under the equity method	6,671			—		—		—			6,671
Investments in non-consolidated real estate businesses	—			—		142,878		—			142,878
Investments in consolidated subsidiaries	265,105			—		—		(265,105		)	—
Restricted assets	1,892			10,365		31		—			12,288
Deferred income taxes	39,627			8,643		5,870		—			54,140
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			13,787		—		—			13,787
Other assets	39,568			9,920		2		—			49,490
Total assets	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	33,752	$	154	$	—		$	33,906
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	782			5,025		113		—			5,920
Intercompany payables	—			493		386		(879		)	—
Accrued promotional expenses	—			17,618		—		—			17,618
Income taxes payable	—			449		34,107		(28,133		)	6,423
Accrued excise and payroll taxes payable, net	—			1,208		—		—			1,208
Litigation accruals and current payments due under the Master Settlement Agreement	—			59,966		—		—			59,966
Deferred income taxes	21,328			10,702		—		—			32,030
Accrued interest	22,398			—		—		—			22,398
Other current liabilities	3,872			7,917		1,291		—			13,080
Total current liabilities	48,380			139,954		36,051		(29,012		)	195,373
Notes payable, long-term debt and other obligations, less current portion	623,215			11,567		3,570		—			638,352
Fair value of derivatives embedded within convertible debt	166,629			—		—		—			166,629
Non-current employee benefits	26,436			19,941		—		—			46,377
Deferred income taxes	72,616			35,306		4,522		—			112,444
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	908			37,504		1,458		—			39,870
Total liabilities	938,184			244,272		45,601		(29,012		)	1,199,045
Commitments and contingencies
Stockholders' deficiency	(129,502		)	136,283		128,822		(265,105		)	(129,502		)
Total liabilities and stockholders' deficiency	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2012
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	401,344		$	3,776	$	735	$	—		$	405,855
Investment securities available for sale	35,330			34,654		—		—			69,984
Accounts receivable - trade, net	—			11,183		64		—			11,247
Intercompany receivables	354			—		—		(354		)	—
Inventories	—			100,392		—		—			100,392
Deferred income taxes	33,238			3,371		—		—			36,609
Income taxes receivable, net	33,302			—		—		(26,523		)	6,779
Restricted assets	—			2,469		—		—			2,469
Other current assets	665			4,848		208		—			5,721
Total current assets	504,233			160,693		1,007		(26,877		)	639,056
Property, plant and equipment, net	2,104			54,810		239		—			57,153
Investment in consolidated real estate businesses, net	—			—		13,295		—			13,295
Long-term investments accounted for at cost	15,540			—		827		—			16,367
Long-term investments accounted for under the equity method	6,432			—		—		—			6,432
Investments in non- consolidated real estate businesses	—			—		119,219		—			119,219
Investments in consolidated subsidiaries	210,525			—		—		(210,525		)	—
Restricted assets	1,898			7,863		31		—			9,792
Deferred income taxes	38,077			5,669		5,396		—			49,142
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			12,870		—		—			12,870
Other assets	39,534			16,144		216		—			55,894
Total assets	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	36,617	$	161	$	—		$	36,778
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	661			5,173		265		—			6,099
Intercompany payables	—			64		290		(354		)	—
Accrued promotional expenses	—			18,730		—		—			18,730
Income taxes payable	—			1,445		31,347		(26,523		)	6,269
Accrued excise and payroll taxes payable, net	—			20,419		—		—			20,419
Litigation accruals and current payments due under the Master Settlement Agreement	—			34,440		—		—			34,440
Deferred income taxes	23,304			3,995		—		—			27,299
Accrued interest	25,410			—		—		—			25,410
Other current liabilities	5,545			9,658		1,688		—			16,891
Total current liabilities	54,920			133,365		33,751		(26,877		)	195,159
Notes payable, long-term debt and other obligations, less current portion	572,023			14,860		63		—			586,946
Fair value of derivatives embedded within convertible debt	172,128			—		—		—			172,128
Non-current employee benefits	25,599			20,261		—		—			45,860
Deferred income taxes	71,777			33,793		3,962		—			109,532
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,148			54,506		704		—			56,358
Total liabilities	897,595			256,785		38,480		(26,877		)	1,165,983
Commitments and contingencies
Stockholders' deficiency	(79,252		)	108,775		101,750		(210,525		)	(79,252		)
Total liabilities and stockholders' deficiency	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731

Schedule of Condensed Income Statement

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	249,120		$	—		$	—		$	249,120
Expenses:
Cost of goods sold	—			180,430			—			—			180,430
Operating, selling, administrative and general expenses	5,506			18,455			489			—			24,450
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(5,506		)	47,858			(489		)	2,377			44,240
Other income (expenses):
Interest expense	(31,723		)	(360		)	(3		)	—			(32,086		)
Change in fair value of derivatives embedded within convertible debt	2,450			—			—			—			2,450
Equity income from non-consolidated real estate businesses	—			—			6,804			—			6,804
Equity income on long-term investments	846			—			—			—			846
Loss on investment securities available for sale	(197		)	—			—			—			(197		)
Equity income in consolidated subsidiaries	32,277			—			—			(32,277		)	—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	1,245			150			76			—			1,471
Income before provision for income taxes	1,769			47,648			6,388			(32,277		)	23,528
Income tax benefit (expense)	11,742			(19,134		)	(2,625		)	—			(10,017		)
Net income	13,511			28,514			3,763			(32,277		)	13,511
Comprehensive income	$	14,633		$	27,179		$	3,763		$	(30,942	)	$	14,633

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	276,594		$	—		$	—		$	276,594
Expenses:
Cost of goods sold	—			211,752			—			—			211,752
Operating, selling, administrative and general expenses	5,223			18,419			272			—			23,914
Management fee expense	—			2,290			—			(2,290		)	—
Operating (loss) income	(5,223		)	44,133			(272		)	2,290			40,928
Other income (expenses):
Interest expense	(25,497		)	(1,006		)	(6		)	—			(26,509		)
Change in fair value of derivatives embedded within convertible debt	(6,003		)	—			—			—			(6,003		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			5,232			—			5,232
Equity loss on long-term investments	(1,215		)	—			—			—			(1,215		)
Equity income in consolidated subsidiaries	28,924			—			—			(28,924		)	—
Management fee income	2,290			—			—			(2,290		)	—
Other, net	456			(8		)	135			—			583
(Loss) income before provision for income taxes	(14,156		)	43,119			5,089			(28,924		)	5,128
Income tax benefit (expense)	18,051			(16,973		)	(2,311		)	—			(1,233		)
Net income	3,895			26,146			2,778			(28,924		)	3,895
Comprehensive income	$	1,137		$	26,585		$	2,778		$	(29,363	)	$	1,137

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	489,522		$	—		$	—		$	489,522
Expenses:
Cost of goods sold	—			353,386			—			—			353,386
Operating, selling, administrative and general expenses	11,382			36,949			469			—			48,800
Management fee expense	—			4,754			—			(4,754		)	—
Operating (loss) income	(11,382		)	94,433			(469		)	4,754			87,336
Other income (expenses):
Interest expense	(64,683		)	(772		)	(7		)	—			(65,462		)
Change in fair value of derivatives embedded within convertible debt	5,499			—			—			—			5,499
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from non-consolidated real estate businesses	—			—			7,285			—			7,285
Equity income on long-term investments	823			—			—			—			823
(Loss) gain on investment securities available for sale	(197		)	5,406			—			—			5,209
Equity income in consolidated subsidiaries	63,565			—			—			(63,565		)	—
Management fee income	4,754			—			—			(4,754		)	—
Other, net	1,947			205			128			—			2,280
(Loss) income before provision for income taxes	(21,132		)	99,272			6,937			(63,565		)	21,512
Income tax benefit (expense)	32,962			(39,791		)	(2,853		)	—			(9,682		)
Net income	11,830			59,481			4,084			(63,565		)	11,830
Comprehensive income	$	18,866		$	61,624		$	4,084		$	(65,708	)	$	18,866

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	534,200		$	—		$	—		$	534,200
Expenses:
Cost of goods sold	—			411,933			—			—			411,933
Operating, selling, administrative and general expenses	11,484			36,623			(214		)	—			47,893
Management fee expense	—			4,581			—			(4,581		)	—
Operating (loss) income	(11,484		)	81,063			214			4,581			74,374
Other income (expenses):
Interest expense	(50,406		)	(2,342		)	(13		)	—			(52,761		)
Change in fair value of derivatives embedded within convertible debt	(27,060		)	—			—			—			(27,060		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			8,095			—			8,095
Equity loss on long-term investments	(1,329		)	—			—			—			(1,329		)
Equity income in consolidated subsidiaries	53,542			—			—			(53,542		)	—
Management fee income	4,581			—			—			(4,581		)	—
Other, net	361			19			135			—			515
(Loss) income before provision for income taxes	(39,683		)	78,740			8,431			(53,542		)	(6,054		)
Income tax benefit (expense)	35,888			(30,206		)	(3,423		)	—			2,259
Net (loss) income	(3,795		)	48,534			5,008			(53,542		)	(3,795		)
Comprehensive (loss) income	$	(10,896	)	$	48,349		$	5,008		$	(53,357	)	$	(10,896	)

Schedule of Condensed Cash Flow Statement

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	5,204		$	57,823		$	2,187		$	(60,024	)	$	5,190
Cash flows from investing activities:
Sale of investment securities	36,533			6,582			—			—			43,115
Purchase of investment securities	(79,368		)	(11,000		)	—			—			(90,368		)
Proceeds from sale or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(19,048		)	—			(19,048		)
Investments in consolidated real estate businesses	—			—			(7,657		)				(7,657		)
Decrease (increase) in cash surrender value of life insurance policies	79			(382		)	—						(303		)
Decrease (increase) in restricted assets	6			(1,274		)	—						(1,268		)
Investments in subsidiaries	(43,584		)	—			—			43,584			—
Proceeds from sale of fixed assets	—			13			—						13
Capital expenditures	(2,247		)	(3,319		)	(429		)				(5,995		)
Repayments of notes receivable	8,433			—			—			—			8,433
Net cash used in investing activities	(85,148		)	(9,380		)	(27,059		)	43,584			(78,003		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			—			3,080						453,080
Deferred financing costs	(11,663		)	—			—						(11,663		)
Repayments of debt	(415,000		)	(3,763		)	(70		)				(418,833		)
Borrowings under revolver	—			474,493			—						474,493
Repayments on revolver	—			(476,888		)	—						(476,888		)
Capital contributions received	—			12,300			31,284			(43,584		)	—
Intercompany dividends paid	—			(50,582		)	(9,442		)	60,024			—
Dividends and distributions on common stock	(71,518		)	—			—						(71,518		)
Net cash (used in) provided by financing activities	(48,181		)	(44,440		)	24,852			16,440			(51,329		)
Net (decrease) increase in cash and cash equivalents	(128,125		)	4,003			(20		)	—			(124,142		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	273,219		$	7,779		$	715		$	—		$	281,713

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	22,900		$	74,473		$	5,557		$	(45,101	)	$	57,829
Cash flows from investing activities:
Purchase of investment securities	—			(1,148		)	—			—			(1,148		)
Proceeds from sale of or liquidation of long-term investments	—			—			72			—			72
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(9,667		)	—			(9,667		)
Distributions from non-consolidated real estate businesses	—			—			6,221			—			6,221
Increase in cash surrender value of life insurance policies	(425		)	(195		)	—			—			(620		)
Decrease (increase) in restricted assets	268			(321		)	—			—			(53		)
Issuance of notes receivable	(234		)	—			—			—			(234		)
Proceeds from sale of fixed assets	393			11			—			—			404
Investments in subsidiaries	(1,008		)	—			—			1,008			—
Capital expenditures	(961		)	(6,334		)	(99		)	—			(7,394		)
Net cash used in investing activities	(6,967		)	(7,987		)	(3,473		)	1,008			(17,419		)
Cash flows from financing activities:
Proceeds from debt issuance	—			14,018			—			—			14,018
Deferred financing costs	—			(315		)	—			—			(315		)
Repayments of debt	—			(13,428		)	(65		)	—			(13,493		)
Borrowings under revolver	—			525,350			—			—			525,350
Repayments on revolver	—			(532,082		)	—			—			(532,082		)
Capital contributions received	—			950			58			(1,008		)	—
Intercompany dividends paid	—			(43,500		)	(1,601		)	45,101			—
Dividends and distributions on common stock	(66,112		)	—			—			—			(66,112		)
Proceeds from exercise of Vector options	45			—			—			—			45
Tax benefits from exercise of Vector options	4			—			—			—			4
Net cash used in financing activities	(66,063		)	(49,007		)	(1,608		)	44,093			(72,585		)
Net (decrease) increase in cash and cash equivalents	(50,130		)	17,479			476			—			(32,175		)
Cash and cash equivalents, beginning of period	238,262			2,488			173			—			240,923
Cash and cash equivalents, end of period	$	188,132		$	19,967		$	649		$	—		$	208,748

XML

Summary of Significant Accounting Policies Schedule of Other Income (Loss), Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Component of Operating Other Cost and Expense [Line Items]
(Loss) gain on warrants	$ (28)	$ (210)	$ 37	$ (853)
Interest income	826	499	1,476	1,041
Accretion of interest income of debt discount on notes receivable	588	32	623	63
Gain on long-term investment	142	135	142	135
Other (loss) income	(57)	127	2	129
Gain on long-term investment	$ 1,471	$ 583	$ 2,280	$ 515

XML

Investments and Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Assets:
Investment securities available for sale	$ 134,141		$ 134,141
Liabilities:
Income (loss) from embedded derivatives	2,450	(6,003)	5,499	(27,060)
Nonrecurring nonfinancial assets subject to fair value measurements	0		0		0
Fair Value, Measurements, Recurring [Member] | Total
Assets:
Money market funds	219,533		219,533		372,718
Certificates of deposit	2,234		2,234		2,240
Bonds	7,577		7,577		6,306
Warrants	806		806		769
Total	364,291		364,291		452,017
Liabilities:
Fair value of derivatives embedded within convertible debt	166,629		166,629		172,128
Total	166,629		166,629		172,128
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Money market funds	219,533		219,533		372,718
Certificates of deposit	0		0		0
Bonds	7,577		7,577		6,306
Investment securities available for sale	79,947		79,947
Warrants	0		0		0
Total	307,057		307,057		448,131
Liabilities:
Fair value of derivatives embedded within convertible debt	0		0		0
Total	0		0		0
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Money market funds	0		0		0
Certificates of deposit	2,234		2,234		2,240
Bonds	0		0		0
Investment securities available for sale	6,744		6,744
Warrants	0		0		0
Total	56,428		56,428		3,117
Liabilities:
Fair value of derivatives embedded within convertible debt	0		0		0
Total	0		0		0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	0		0		0
Certificates of deposit	0		0		0
Bonds	0		0		0
Investment securities available for sale	0		0
Warrants	806		806		769
Total	806		806		769
Liabilities:
Fair value of derivatives embedded within convertible debt	166,629		166,629		172,128
Total	166,629		166,629		172,128
Equity securities
Assets:
Investment securities available for sale	86,691		86,691
Equity securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	86,691		86,691		69,984
Equity securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale					69,107
Equity securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale					877
Equity securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale					0
U.S. Government securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	10,094		10,094
U.S. Government securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
U.S. Government securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	10,094		10,094
U.S. Government securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Corporate securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	30,031		30,031
Corporate securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Corporate securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	30,031		30,031
Corporate securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
U.S. mortgage backed securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	589		589
U.S. mortgage backed securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
U.S. mortgage backed securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	589		589
U.S. mortgage backed securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Commercial mortgage-backed securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	5,886		5,886
Commercial mortgage-backed securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Commercial mortgage-backed securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	5,886		5,886
Commercial mortgage-backed securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
U.S. asset backed securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	850		850
U.S. asset backed securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
U.S. asset backed securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	850		850
U.S. asset backed securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fixed income securities
Assets:
Investment securities available for sale	47,450		47,450
Fixed income securities | Fair Value, Measurements, Recurring [Member] | Total
Assets:
Investment securities available for sale	47,450		47,450
Fixed income securities | Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fixed income securities | Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	47,450		47,450
Fixed income securities | Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	$ 0		$ 0
Variable Interest 7.50% Senior Convertible Debentures [Member]
Liabilities:
Convertible debt effective interest rate			7.50%

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Income (loss) before provision for income taxes	$ 23,528	$ 5,128	$ 21,512	$ (6,054)
Income tax expense (benefit) using estimated annual effective income tax rate	9,575	1,904	8,755	(2,247)
Changes in effective tax rates	321	98	0	0
Out-of-period adjustment related to non-deductible expenses in 2011	0	0	0	757
Impact of discrete items, net	121	(769)	927	(769)
Income tax expense (benefit)	10,017	1,233	9,682	(2,259)
Secured Debt [Member] | 11% Senior Secured Notes Due 2015 [Member]
Income Tax Disclosure [Line Items]
Interest Rate	11.00%		11.00%
Vector [Member]
Income Tax Disclosure [Abstract]
Income (loss) before provision for income taxes	1,769	(14,156)	(21,132)	(39,683)
Income tax expense (benefit)	$ (11,742)	$ (18,051)	$ (32,962)	$ (35,888)
Vector [Member] | Secured Debt [Member] | 11% Senior Secured Notes Due 2015 [Member]
Income Tax Disclosure [Line Items]
Interest Rate	11.00%		11.00%
Vector [Member] | Secured Debt [Member] | Variable Interest 3.875% Senior Convertible Debentures Due 2026 [Member]
Income Tax Disclosure [Line Items]
Interest Rate	3.875%		3.875%

XML

Notes Payable, Long Term Debt and Other Obligations Fair Value of Notes Payable and Long Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 672,258	$ 623,724
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 1,030,462	$ 963,672

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Stockholders' deficiency:
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	93,708,273	93,658,273
Common stock, shares outstanding	89,948,411	89,898,411
Common stock in treasury, shares	3,759,862	3,759,862

XML

Contingencies

6 Months Ended

Jun. 30, 2013

Contingencies [Abstract]

CONTINGENCIES

CONTINGENCIES

Tobacco-Related Litigation:

Overview

Since 1954, Liggett and other United States cigarette manufacturers have been named as defendants in numerous direct, third-party and purported class actions predicated on the theory that cigarette manufacturers should be liable for damages alleged to have been caused by cigarette smoking or by exposure to secondary smoke from cigarettes. New cases continue to be commenced against Liggett and other cigarette manufacturers. The cases have generally fallen into the following categories: (i) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs (“Individual Actions”); (ii) lawsuits by individuals requesting the benefit of the Engle ruling ("Engle progeny cases"); (iii) smoking and health cases primarily alleging personal injury or seeking court-supervised programs for ongoing medical monitoring, as well as cases alleging the use of the terms “lights” and/or “ultra lights” constitutes a deceptive and unfair trade practice, common law fraud or violation of federal law, purporting to be brought on behalf of a class of individual plaintiffs (“Class Actions”); and (iv) health care cost recovery actions brought by various foreign and domestic governmental plaintiffs and non-governmental plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits (“Health Care Cost Recovery Actions”). As new cases are commenced, the costs associated with defending these cases and the risks relating to the inherent unpredictability of litigation continue to increase. The future financial impact of the risks and expenses of litigation are not quantifiable at this time. For the six months ended June 30, 2013 and 2012, Liggett incurred legal expenses and other litigation costs totaling approximately $3,562 and $4,030, respectively.

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases. Management reviews on a quarterly basis with counsel all pending litigation and evaluates whether an estimate can be  made of the possible loss or range of loss that could result from an unfavorable outcome. An unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages awarded in some tobacco-related litigation can be significant.

Bonds. Although Liggett has been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from seeking to collect judgments while adverse verdicts are on appeal, there remains a risk that such relief may not be obtainable in all cases. This risk has been reduced given that a majority of states now limit the dollar amount of bonds or require no bond at all. To obtain stays on judgments pending current appeals, Liggett has secured approximately $7,577 in bonds as of June 30, 2013.

In June 2009, Florida amended its existing bond cap statute by adding a $200,000 bond cap that applies to all Engle progeny cases in the aggregate and establishes individual bond caps for individual Engle progeny cases in amounts that vary depending on the number of judgments in effect at a given time. Plaintiffs, in several cases, have challenged the constitutionality of the bond cap statute, but to date, the courts that have addressed the issue have upheld the constitutionality of the statute. The plaintiffs have appealed some of these rulings and the Florida Supreme Court, after granting review of the Hall decision denying plaintiff's challenge to the bond cap statute, subsequently dismissed the matter prior to the scheduled argument as moot. No federal court has yet addressed the issue. Although the Company cannot predict the outcome of such challenges, it is possible that the Company's consolidated financial position, results of operations, and cash flows could be materially affected by an unfavorable outcome of such challenges.

Accounting Policy. The Company and its subsidiaries record provisions in their consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except as disclosed in this Note 6: (i) management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; or (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome of any of the pending tobacco-related cases and, therefore, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes, if any. Legal defense costs are expensed as incurred.

Cautionary Statement About Engle Progeny Cases. Judgments have been entered against Liggett and other industry defendants in Engle progeny cases. Several of the judgments have been affirmed on appeal. To date, the United States Supreme Court has declined to review these cases. At June 30, 2013, Liggett and the Company were defendants in 3,043 state and 1,257 federal Engle progeny cases. As of June 30, 2013, 14Engle progeny cases where Liggett was a defendant at trial resulted in verdicts, exclusive of the Lukacs case, discussed below. Thirteen of these cases were in state court and one was in federal court. Nine verdicts were returned in favor of the plaintiffs and five in favor of Liggett. Other cases have either been voluntarily dismissed by plaintiffs, dismissed by the court on summary judgment or a mistrial was declared. Excluding the Lukacs case, the compensatory verdicts against Liggett have ranged from $1 to $3,008. In certain cases, the judgments entered have been joint and several with other defendants. In two of the cases, punitive damages were awarded against Liggett for $1,000 and $7,600. After exhausting all appeals, Liggett paid the judgments and related costs and interest in the Campbell and Clay cases. Since February 2009, when Engle progeny trials commenced, 85 state cases and 13 federal cases have been tried to a verdict. Based on the current rate of trials per year, it would require decades to resolve the remaining cases. Except as discussed in this Note 6, with respect to the seven cases where an adverse verdict was entered against Liggett and which are currently on appeal, management is unable to estimate the possible loss or range of loss from the remaining Engle progeny cases as there are currently multiple defendants in each case and, in most cases, discovery has not occurred or is limited. As a result, the Company lacks information about whether plaintiffs are in fact Engle class members (non-class members' claims are generally time-barred), the relevant smoking history, the nature of the alleged injury and the availability of various defenses, among other things. Further, plaintiffs typically do not specify their demand for damages. The Company believes that the process under which Engle progeny cases are tried is unconstitutional and continues to pursue its appellate rights.

Although Liggett has generally been successful in managing litigation, litigation is subject to uncertainty and significant challenges remain, particularly with respect to the Engle progeny cases. There can be no assurances that Liggett's past litigation experience will be representative of future results. Judgments have been entered against Liggett in the past, in Individual Actions and Engle progeny cases, and several of those judgments were affirmed on appeal and satisfied by Liggett. Litigation is subject to many uncertainties. It is possible that the consolidated financial position, results of operations and cash flows of the Company could be materially adversely affected by an unfavorable outcome or settlement of certain pending smoking-related litigation. Liggett believes, and has been so advised by counsel, that it has valid defenses to the litigation pending against it, as well as valid bases for appeal of adverse verdicts. All such cases are, and will continue to be, vigorously defended. Liggett may, however, enter into settlement discussions in particular cases if it believes it is in its best interest to do so. In connection with the Engle progeny cases, Liggett has been receptive to opportunities to settle these cases, individually or on some aggregated basis, on terms it believes are economically favorable to Liggett and will continue to explore such opportunities.  Recently, the federal court ordered the parties to engage in mediation to explore the prospect for a global resolution of the federal cases. As of June 30, 2013, Liggett (and in certain cases the Company), has settled 144Engle progeny cases for approximately $1,146, in the aggregate.  If Liggett were able to resolve the Engle progeny cases on an aggregated basis, Liggett believes the range of loss could be between $34,000 and $85,000, but there can be no assurances that the Engle progeny cases can be resolved on an aggregated basis, nor can there be any assurances that Liggett's settlement experience to date will be representative of future results or intentions.

Individual Actions

As of June 30, 2013, there were 63 Individual Actions pending against Liggett and, in certain cases, the Company, where one or more individual plaintiffs allege injury resulting from cigarette smoking, addiction to cigarette smoking or exposure to secondary smoke and seek compensatory and, in some cases, punitive damages. These cases do not include Engle progeny cases or the approximately 100 individual cases pending in West Virginia state court as part of a consolidated action. The following table lists the number of Individual Actions, by state, that are pending against Liggett or the Company as of June 30, 2013:

State	Number of Cases
Florida	45
New York	9
Louisiana	3
Maryland	2
West Virginia	2
Missouri	1
Ohio	1

The plaintiffs' allegations of liability in cases in which individuals seek recovery for injuries allegedly caused by cigarette smoking are based on various theories of recovery, including negligence, gross negligence, breach of special duty, strict liability, fraud, concealment, misrepresentation, design defect, failure to warn, breach of express and implied warranties, conspiracy, aiding and abetting, concert of action, unjust enrichment, common law public nuisance, property damage, invasion of privacy, mental anguish, emotional distress, disability, shock, indemnity and violations of deceptive trade practice laws, the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), state RICO statutes and antitrust statutes. In many of these cases, in addition to compensatory damages, plaintiffs also seek other forms of relief including treble/multiple damages, medical monitoring, disgorgement of profits and punitive damages. Although alleged damages often are not determinable from a complaint, and the law governing the pleading and calculation of damages varies from state to state and jurisdiction to jurisdiction, compensatory and punitive damages have been specifically pleaded in a number of cases, sometimes in amounts ranging into the hundreds of millions and even billions of dollars.

Defenses raised in Individual Actions include lack of proximate cause, assumption of the risk, comparative fault and/or contributory negligence, lack of design defect, statute of limitations, equitable defenses such as “unclean hands” and lack of benefit, failure to state a claim and federal preemption.

Engle Progeny Cases

EngleCase. In May 1994, Engle was filed against Liggett and others in Miami-Dade County, Florida. The class consisted of all Florida residents who, by November 21, 1996, “have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarette smoking.” In July 1999, after the conclusion of Phase I of the trial, the jury returned a verdict against Liggett and other cigarette manufacturers on certain issues determined by the trial court to be “common” to the causes of action of the plaintiff class. The jury made several findings adverse to the defendants including that defendants' conduct “rose to a level that would permit a potential award or entitlement to punitive damages.” Phase II of the trial was a causation and damages trial for three of the class plaintiffs and a punitive damages trial on a class-wide basis before the same jury that returned the verdict in Phase I. In April 2000, the jury awarded compensatory damages of $12,704 to the three class plaintiffs, to be reduced in proportion to the respective plaintiff’s fault. In July 2000, the jury awarded approximately $145,000,000 in punitive damages, including $790,000 against Liggett.

In May 2003, Florida’s Third District Court of Appeal reversed the trial court and remanded the case with instructions to decertify the class. The judgment in favor of one of the three class plaintiffs, in the amount of $5,831, was overturned as time barred and the court found that Liggett was not liable to the other two class plaintiffs.

In July 2006, the Florida Supreme Court affirmed the decision vacating the punitive damages award and held that the class should be decertified prospectively, but determined that the following Phase I findings are entitled to res judicata effect in Engle progeny cases: (i) that smoking causes lung cancer, among other diseases; (ii) that nicotine in cigarettes is addictive; (iii) that defendants placed cigarettes on the market that were defective and unreasonably dangerous; (iv) that defendants concealed material information knowing that the information was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking; (v) that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers would rely on the information to their detriment; (vi) that defendants sold or supplied cigarettes that were defective; and (vii) that defendants were negligent. The Florida Supreme Court decision also allowed former class members to proceed to trial on individual liability issues (using the above findings) and compensatory and punitive damage issues, provided they filed their individual lawsuits by January 2008. In December 2006, the Florida Supreme Court added the finding that defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to the representations made by defendants. In October 2007, the United States Supreme Court denied defendants' petition for writ of certiorari.

Pursuant to the Florida Supreme Court’s July 2006 ruling in Engle, which decertified the class on a prospective basis, and affirmed the appellate court’s reversal of the punitive damages award, former class members had until January 2008 in which to file individual lawsuits. As of June 30, 2013, Liggett and the Company are named defendants in 4,300Engle progeny cases in both federal (1,257 cases) and state (3,043 cases) courts in Florida. These cases include approximately 5,481 plaintiffs. Other cigarette manufacturers are also named as defendants in these cases, although as a case proceeds, one or more defendants may ultimately be dismissed from the action. The number of state court Engle progeny cases may increase as multi-plaintiff cases continue to be severed into individual cases. The number of federal cases may increase as plaintiffs have appealed the dismissal of over 800 cases by the federal court. The total number of plaintiffs may also increase as a result of attempts by existing plaintiffs to add additional parties. Although the Company was not named as a defendant in the Engle case, it has been named as a defendant in most of the Engle progeny cases where Liggett is named as a defendant.

As of June 30, 2013, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Net Compensatory Damages	Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Affirmed by the Third District Court of Appeal. Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Affirmed by the Second District Court of Appeal. In March 2013, the Florida Supreme Court affirmed. Liggett intends to file a petition for writ of certiorari to the US Supreme Court.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	Affirmed by the First District Court of Appeal. The US Supreme Court declined to review the case. Liggett satisfied the judgment and the case is concluded.
April 2010	Putney v. R.J. Reynolds	Broward	$3,008	None	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings. Plaintiff filed a motion for rehearing.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	On appeal to the Fourth District Court of Appeal. Oral argument occurred on June 19, 2013. A decision is pending.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	A joint and several judgment for $487 was entered against Liggett and RJR. On appeal to the First District Court of Appeal. Oral argument occurred on July 17, 2013.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against all defendants. On appeal to the Fourth District Court of Appeal.
December 2012	Buchanan v. R.J. Reynolds	Leon	$2,035	None	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. On appeal to the First District Court of Appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court on June 24, 2013.

The Company's potential range of loss in the Douglas, Putney, Tullo,Ward, Calloway,Buchanan and Cohen cases is between $0 and $16,371 in the aggregate, plus accrued interest and legal fees. In determining the range of loss, the Company considers potential settlements as well as future appellate relief. Except as disclosed elsewhere in this Note 6, the Company is unable to determine a range of loss related to the remaining Engle progeny cases. No amounts have been expensed or accrued in the accompanying consolidated financial statements for these cases. However, as cases proceed through the appellate process, the Company will consider accruals on a case-by-case basis if an unfavorable outcome becomes probable and the amount can be reasonably estimated.

LukacsCase. In June 2002, the jury in a Florida state court action entitled Lukacs v. R.J. Reynolds Tobacco Co., awarded $37,500 in compensatory damages, jointly and severally, in a case involving Liggett and two other cigarette manufacturers, which amount was subsequently reduced by the court. The jury found Liggett 50% responsible for the damages incurred by the plaintiff. The Lukacs case was the first case to be tried as an individual Engle progeny case, but was tried almost five years prior to the Florida Supreme Court's final decision in Engle. In November 2008, the court entered final judgment in the amount of $24,835, plus interest from June 2002. In March 2010, the Third District Court of Appeal affirmed the decision, per curiam. Liggett satisfied its share of the judgment, including attorneys' fees and accrued interest, for $14,361.

Federal Engle Progeny Cases. Three federal judges (in the Merlob, B. Brown and Burr cases) ruled that the findings in Phase I of the Engle proceedings could not be used to satisfy elements of plaintiffs' claims, and two of those rulings (B.Brown and Burr) were certified by the trial court for interlocutory review. The certification was granted by the United States Court of Appeals for the Eleventh Circuit and the appeals were consolidated (in February 2009, the appeal in Burr was dismissed for lack of prosecution). In July 2010, the Eleventh Circuit ruled that plaintiffs do not have an unlimited right to use the findings from the original Engle trial to meet their burden of establishing the elements of their claims at trial. Rather, plaintiffs may only use the findings to establish specific facts that they demonstrate with a reasonable degree of certainty were actually decided by the original Engle jury. The Eleventh Circuit remanded the case to the district court to determine what specific factual findings the Engle jury actually made. All federal cases were stayed pending review by the Eleventh Circuit. The stays were subsequently lifted in a number of cases. At present, Liggett is a defendant in eight of the active cases.

Appeals of Engle Progeny Verdicts. In December 2010, in the Martin case, a state court case against R.J. Reynolds, the First District Court of Appeal issued the first ruling by a Florida intermediate appellate court to address the B. Brown decision discussed above. The panel held that the trial court correctly construed the Florida Supreme Court's 2006 decision in Engle in instructing the jury on the preclusive effect of the Phase I Engle proceedings, expressly disagreeing with certain aspects of the B. Brown decision. In July 2011, the Florida Supreme Court declined to review the First District Court of Appeal's decision. In March 2012, the United States Supreme Court declined to review the Martin case, along with the Campbell case and two other Engle progeny cases. This decision could lead to other adverse rulings by state appellate courts.

In the Waggoner case, the United States District Court for the Middle District of Florida directed the parties to brief the applicability of the Engle findings to all Middle District cases. Liggett and the Company are not defendants in Waggoner, but nonetheless, were directed to submit motions on the issues. In December 2011, the district court ruled that it was bound by Martin and Jimmie Lee Brown (discussed below) and that the application of the Phase I findings did not deprive defendants of any constitutional due process rights. The court ruled, however, that plaintiffs must establish legal causation to establish liability. With respect to punitive damages, the district court held that the plaintiffs could rely on the findings in support of their punitive damages claims but that, in addition, plaintiffs must demonstrate specific conduct by specific defendants, independent of the Engle findings, that satisfies the standards for awards of punitive damages. The Waggoner ruling applies to all of the cases pending in the Middle District of Florida.  The Waggoner court declined to address certain issues raised by Liggett and the Company and directed that their motion be re-filed in a case in which they were named as defendants.  As a result, Liggett filed a motion in the Young-McCray case raising issues specific to Liggett.  The court denied the motion and adopted the Waggoner ruling as to Liggett. Liggett was subsequently dropped as a defendant before trial. These issues are on appeal to the United States Court of Appeals for the Eleventh Circuit in Walker and Duke, cases in which Liggett is not a party. Oral argument is scheduled for July 31, 2013.

In Jimmie Lee Brown, a state court case against R.J. Reynolds, the trial court tried the case in two phases. In the first phase, the jury determined that the smoker was addicted to cigarettes that contained nicotine and that his addiction was a legal cause of his death, thereby establishing he was an Engle class member. In the second phase, the jury determined whether the plaintiff established legal cause and damages with regard to each of the underlying claims.  The jury found in favor of plaintiff in both phases.  In September 2011, the Fourth District Court of Appeal affirmed the judgment entered in plaintiff's favor and approved the trial court's procedure of bifurcating the trial.  The Fourth District Court of Appeal agreed with Martin that individual post-Engle plaintiffs need not prove conduct elements as part of their burden of proof, but disagreed with Martin to the extent that the First District Court of Appeal only required a finding that the smoker was a class member to establish legal causation as to addiction and the underlying claims.  The Fourth District Court of Appeal held that in addition to establishing class membership, Engle progeny plaintiffs must also establish legal causation and damages as to each claim asserted.  In so finding, the Fourth District Court of Appeal's decision in Jimmie Lee Brown is in conflict with Martin.  In dicta, the Fourth District Court of Appeal further voiced concern that the preclusive effect of the Engle findings violates the tobacco company defendants' due process rights and, in the special concurring opinion, the court emphasized that until the Florida Supreme Court gives trial courts guidance as to what it intended by its Engle decision, trial courts will continue to play “a form of legal poker.” In September 2011, R.J. Reynolds filed a motion asking the Fourth District Court of Appeal to certify the case to the Florida Supreme Court for review. The motion was denied in October 2011.

In the Rey case, a state court Engle progeny case, the trial court entered final summary judgment on all claims in favor of the Company, Liggett and Lorillard based on what has been referred to in the Engle progeny litigation as the "Liggett Rule."  The Liggett Rule stands for the proposition that a manufacturer cannot have liability to a smoker under any asserted claim if the smoker did not use a product manufactured by that particular defendant.  The Liggett Rule is based on the entry of final judgment in favor of Liggett/Brooke Group in Engle on all of the claims asserted against them by class representatives Mary Farnan and Angie Della Vecchia, even though the Florida Supreme Court upheld, as res judicata,the generic finding that Liggett/Brooke Group engaged in a conspiracy to commit fraud by concealment. In September 2011, the Third District Court of Appeal affirmed in part and reversed in part holding that the defendants were entitled to summary judgment on all claims asserted against them other than the claim for civil conspiracy.  Defendants' motions for rehearing were denied with regard to the Liggett Rule issues.  Defendants sought further review by the Florida Supreme Court and on August 20, 2012, the petition for review was denied. In March 2012, the Fifth District Court of Appeal, in other progeny cases, followed the Third District Court of Appeal and reversed summary judgment on the conspiracy claims. The Florida Supreme Court refused to accept jurisdiction of defendants' appeals.

In March 2012, in Douglas, the Second District Court of Appeal issued a decision affirming the judgment of the trial court in favor of the plaintiff and upholding the use of the Engle jury findings but certified to the Florida Supreme Court the question of whether granting res judicata effect to the Engle jury findings violates defendants' federal due process rights. In March 2013, the Florida Supreme Court affirmed the use of Engle jury findings and determined that there is no violation of the defendants' due process rights. The defendants intend to file a petition for writ of certiorari to the United States Supreme Court.

In June 2013, in Capone, the Florida Supreme Court held that the Florida Wrongful Death Act does not require the filing of a new action for wrongful death.  Rather, upon the death of a party plaintiff in a personal injury action, the personal representative of the decedent's estate may be substituted as plaintiff and, thereafter, shall have a reasonable opportunity to file an amended pleading that alleges new or amended claims and causes of action.

In June 2013, in Sury, the First District Court of Appeal held that where the jury found defendants liable under both negligence and intentional tort theories, the trial court did not abuse its discretion in refusing to reduce the damages awarded by the jury by the percentage of fault attributable to decedent.

Liggett Only Cases.  There are currently five cases pending where Liggett is the only remaining tobacco company defendant. These cases consist of three Individual Actions and twoEngle progeny cases. In one of the Individual Actions, Hausrath (NY state court), plaintiff moved to restore the case to the active docket calendar. The motion was granted by the court. There has been no recent activity in the other two Individual Actions. One of the Engle progeny cases, Katz, is currently set for trial on January 6, 2014. Cases where Liggett is the only defendant could increase substantially as a result of the Engle progeny cases.

Class Actions

As of June 30, 2013, there were four actions pending for which either a class had been certified or plaintiffs were seeking class certification, where Liggett is a named defendant, including one alleged price fixing case. Other cigarette manufacturers are also named in these actions.

Plaintiffs' allegations of liability in class action cases are based on various theories of recovery, including negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, nuisance, breach of express and implied warranties, breach of special duty, conspiracy, concert of action, violation of deceptive trade practice laws and consumer protection statutes and claims under the federal and state anti-racketeering statutes. Plaintiffs in the class actions seek various forms of relief, including compensatory and punitive damages, treble/multiple damages and other statutory damages and penalties, creation of medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and equitable relief.

Defenses raised in these cases include, among others, lack of proximate cause, individual issues predominate, assumption of the risk, comparative fault and/or contributory negligence, statute of limitations and federal preemption.

In Smith v. Philip Morris, a Kansas state court case filed in February 2000, plaintiffs allege that cigarette manufacturers conspired to fix cigarette prices in violation of antitrust laws. Plaintiffs seek to recover an unspecified amount in actual and punitive damages. Class certification was granted in November 2001. In January 2012, the trial court heard oral argument on defendants' motions for summary judgment and in March 2012, the court granted the motions and dismissed plaintiffs' claims with prejudice. In July 2012, plaintiffs noticed an appeal. The appeal is pending.

In November 1997, in Young v. American Tobacco Co., a purported personal injury class action was commenced on behalf of plaintiff and all similarly situated residents in Louisiana who, though not themselves cigarette smokers, are alleged to have been exposed to secondhand smoke from cigarettes which were manufactured by the defendants, and who suffered injury as a result of that exposure. The plaintiffs seek to recover an unspecified amount of compensatory and punitive damages. In October 2004, the trial court stayed this case pending the outcome of an appeal in another matter, which has been concluded. There has been no further activity in this case.

In February 1998, in Parsons v. AC & S Inc., a case pending in West Virginia, a class was commenced on behalf of all West Virginia residents who allegedly have personal injury claims arising from exposure to cigarette smoke and asbestos fibers. The complaint seeks to recover $1,000 in compensatory and punitive damages individually and unspecified compensatory and punitive damages for the class. The case is stayed as a result of the December 2000 bankruptcy of three of the defendants.

Although not technically a class action, in In Re: Tobacco Litigation (Personal Injury Cases), a West Virginia state court consolidated approximately 750 individual smoker actions that were pending prior to 2001 for trial of certain common issues. In January 2002, the court severed Liggett from the trial of the consolidated action, which commenced in June 2010 and ended in a mistrial. The rescheduled trial commenced in October 2011 and it, too, ended in a mistrial. A new trial commenced on April 15, 2013. On May 15, 2013, the jury rejected all but one of the plaintiffs' claims, finding for the plaintiffs on the claim that ventilated filter cigarettes, sold between 1964 and July 1, 1969, should have included instructions on how to use them. On July 15, 2013, plaintiffs filed a renewed motion for judgment as a matter of law and a motion for a new trial. Defendants filed a motion for judgment notwithstanding the verdict. The issue of damages was reserved for further proceedings that have not yet been scheduled. If the case were to proceed against Liggett, it is estimated that Liggett could be a defendant in approximately 100 of the individual cases.

Class action suits have been filed in a number of states against cigarette manufacturers, alleging, among other things, that use of the terms “lights” and “ultra lights” constitutes unfair and deceptive trade practices. In December 2008, the United States Supreme Court, in Altria Group v. Good, ruled that the Federal Cigarette Labeling and Advertising Act did not preempt the state law claims asserted by the plaintiffs and that they could proceed with their claims under the Maine Unfair Trade Practices Act. The Good decision has resulted in the filing of additional “lights” class action cases in other states against other cigarette manufacturers. Although Liggett was not a defendant in the Good case, and is not currently a defendant in any other “lights” class actions, an adverse ruling or commencement of additional “lights” related class actions could have a material adverse effect on the Company.

In addition to the cases described above, numerous class actions remain certified against other cigarette manufacturers. Adverse decisions in these cases could have a material adverse affect on Liggett’s sales volume, operating income and cash flows.

Health Care Cost Recovery Actions

As of June 30, 2013, there was one Health Care Cost Recovery Action pending against Liggett, Crow Creek Sioux Tribe v. American Tobacco Company, a South Dakota case filed in 1997, where the plaintiff seeks to recover damages based on various theories of recovery as a result of alleged sales of tobacco products to minors. The case is inactive. Other cigarette manufacturers are also named as defendants.

The claims asserted in health care cost recovery actions vary. Although, typically, no specific damage amounts are pled, it is possible that requested damages might be in the billions of dollars. In these cases, plaintiffs typically assert equitable claims that the tobacco industry was “unjustly enriched” by their payment of health care costs allegedly attributable to smoking and seek reimbursement of those costs. Relief sought by some, but not all, plaintiffs include punitive damages, multiple damages and other statutory damages and penalties, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of anti-smoking programs, additional disclosure of nicotine yields, and payment of attorney and expert witness fees.

Other claims asserted include the equitable claim of indemnity, common law claims of negligence, strict liability, breach of express and implied warranty, breach of special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, claims under state and federal statutes governing consumer fraud, antitrust, deceptive trade practices and false advertising, and claims under RICO.

Department of Justice Lawsuit. In September 1999, the United States government commenced litigation against Liggett and other cigarette manufacturers in the United States District Court for the District of Columbia. The action sought to recover an unspecified amount of health care costs paid and to be paid by the federal government for lung cancer, heart disease, emphysema and other smoking-related illnesses allegedly caused by the fraudulent and tortious conduct of defendants, to restrain defendants and co-conspirators from engaging in alleged fraud and other allegedly unlawful conduct in the future, and to compel defendants to disgorge the proceeds of their unlawful conduct. Claims were asserted under RICO.

In August 2006, the trial court entered a Final Judgment against each of the cigarette manufacturing defendants, except Liggett. In May 2009, the United States Court of Appeals for the District of Columbia affirmed most of the district court's decision. The United States Supreme Court denied review. As a result, the cigarette manufacturing defendants, other than Liggett, are now subject to the trial court's Final Judgment which ordered the following relief: (i) an injunction against “committing any act of racketeering” relating to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States; (ii) an injunction against participating directly or indirectly in the management or control of the Council for Tobacco Research, the Tobacco Institute, or the Center for Indoor Air Research, or any successor or affiliated entities of each; (iii) an injunction against “making, or causing to be made in any way, any material false, misleading, or deceptive statement or representation or engaging in any public relations or marketing endeavor that is disseminated to the United States' public and that misrepresents or suppresses information concerning cigarettes”; (iv) an injunction against conveying any express or implied health message through use of descriptors on cigarette packaging or in cigarette advertising or promotional material, including “lights,” “ultra lights,” and “low tar,” which the court found could cause consumers to believe one cigarette brand is less hazardous than another brand; (v) the issuance of “corrective statements” in various media regarding the adverse health effects of smoking, the addictiveness of smoking and nicotine, the lack of any significant health benefit from smoking “low tar” or “lights” cigarettes, defendants' manipulation of cigarette design to ensure optimum nicotine delivery and the adverse health effects of exposure to environmental tobacco smoke; (vi) the disclosure of defendants' public document websites and the production of all documents produced to the government or produced in any future court or administrative action concerning smoking and health; (vii) the disclosure of disaggregated marketing data to the government in the same form and on the same schedules as defendants now follow in disclosing such data to the Federal Trade Commission for a period of ten years; (viii) certain restrictions on the sale or transfer by defendants of any cigarette brands, brand names, formulas or cigarette business within the United States; and (ix) payment of the government's costs in bringing the action.

It is unclear what impact, if any, the Final Judgment will have on the cigarette industry as a whole. To the extent that the Final Judgment leads to a decline in industry-wide shipments of cigarettes in the United States or otherwise results in restrictions that adversely affect the industry, Liggett's sales volume, operating income and cash flows could be materially adversely affected.

Upcoming Trials

As of June 30, 2013, there were 34Engle progeny cases scheduled for trial through June 30, 2014, where Liggett and/or the Company are named defendants. There are additional cases against other cigarette manufacturers that are also scheduled for trial through June 30, 2014. Trial dates are, however, subject to change.

MSA and Other State Settlement Agreements

In March 1996, March 1997 and March 1998, Liggett entered into settlements of smoking-related litigation with 45 states and territories. The settlements released Liggett from all smoking-related claims made by those states and territories, including claims for health care cost reimbursement and claims concerning sales of cigarettes to minors.

In November 1998, Philip Morris, Brown & Williamson, R.J. Reynolds and Lorillard (the “Original Participating Manufacturers” or “OPMs”) and Liggett (together with any other tobacco product manufacturer that becomes a signatory, the “Subsequent Participating Manufacturers” or “SPMs”) (the OPMs and SPMs are hereinafter referred to jointly as the “Participating Manufacturers”) entered into the Master Settlement Agreement (the “MSA”) with 46 states, the District of Columbia, Puerto Rico, Guam, the United States Virgin Islands, American Samoa and the Northern Mariana Islands (collectively, the “Settling States”) to settle the asserted and unasserted health care cost recovery and certain other claims of the Settling States. The MSA received final judicial approval in each Settling State.

As a result of the MSA, the Settling States released Liggett from:

• all claims of the Settling States and their respective political subdivisions and other recipients of state health care funds, relating to: (i) past conduct arising out of the use, sale, distribution, manufacture, development, advertising and marketing of tobacco products; (ii) the health effects of, the exposure to, or research, statements or warnings about, tobacco products; and

• all monetary claims of the Settling States and their respective subdivisions and other recipients of state health care funds relating to future conduct arising out of the use of, or exposure to, tobacco products that have been manufactured in the ordinary course of business.

The MSA restricts tobacco product advertising and marketing within the Settling States and otherwise restricts the activities of Participating Manufacturers. Among other things, the MSA prohibits the targeting of youth in the advertising, promotion or marketing of tobacco products; bans the use of cartoon characters in all tobacco advertising and promotion; limits each Participating Manufacturer to one tobacco brand name sponsorship during any 12-month period; bans all outdoor advertising, with certain limited exceptions; prohibits payments for tobacco product placement in various media; bans gift offers based on the purchase of tobacco products without sufficient proof that the intended recipient is an adult; prohibits Participating Manufacturers from licensing third parties to advertise tobacco brand names in any manner prohibited under the MSA; and prohibits Participating Manufacturers from using as a tobacco product brand name any nationally recognized non-tobacco brand or trade name or the names of sports teams, entertainment groups or individual celebrities.

The MSA also requires Participating Manufacturers to affirm corporate principles to comply with the MSA and to reduce underage use of tobacco products and imposes restrictions on lobbying activities conducted on behalf of Participating Manufacturers. In addition, the MSA provides for the appointment of an independent auditor to calculate and determine the amounts of payments owed pursuant to the MSA.

Under the payment provisions of the MSA, the Participating Manufacturers are required to make annual payments of $9,000,000 (subject to applicable adjustments, offsets and reductions). These annual payments are allocated based on unit volume of domestic cigarette shipments. The payment obligations under the MSA are the several, and not joint, obligation of each Participating Manufacturer and are not the responsibility of any parent or affiliate of a Participating Manufacturer.

Liggett has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 1.65% of total cigarettes sold in the United States. Vector Tobacco has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 0.28% of total cigarettes sold in the United States. Liggett and Vector Tobacco's domestic shipments accounted for 3.5% of the total cigarettes sold in the United States in 2012. If Liggett’s or Vector Tobacco’s market share exceeds their respective market share exemption in a given year, then on April 15 of the following year, Liggett and/or Vector Tobacco, as the case may be, must pay on each excess unit an amount equal (on a per-unit basis) to that due from the OPMs for that year. On December 31, 2012, Liggett paid $105,000 of its $138,900 2012 MSA payment obligation. On April 15, 2013, Liggett and Vector Tobacco paid an additional $30,800, of which approximately $18,700 was paid into the disputed payments account. Liggett disputed, and withheld, approximately $3,100.

Certain MSA Disputes

NPM Adjustment.  In March 2006, an economic consulting firm selected pursuant to the MSA determined that the MSA was a “significant factor contributing to” the loss of market share of Participating Manufacturers, to non-participating manufacturers, for 2003. This is known as the “NPM Adjustment.” The economic consulting firm subsequently rendered the same decision with respect to 2004 and 2005. In March 2009, a different economic consulting firm made the same determination for 2006. As a result, the manufacturers are entitled to potential NPM Adjustments to each of their 2003 - 2006 MSA payments. The Participating Manufacturers are also entitled to potential NPM Adjustments to their 2007 - 2012 payments pursuant to agreements entered into between the OPMs and the Settling States under which the OPMs agreed to make certain payments for the benefit of the Settling States, in exchange for which the Settling States stipulated that the MSA was a “significant factor contributing to” the loss of market share of Participating Manufacturers for each of those years. A Settling State that has diligently enforced its qualifying escrow statute in the year in question may be able to avoid application of the NPM Adjustment to the payments made by the manufacturers for the benefit of that Settling State.

For 2003 through 2012, Liggett and Vector Tobacco, as applicable, disputed that they owed the Settling States the NPM Adjustments as calculated by the Independent Auditor. As permitted by the MSA, Liggett and Vector Tobacco withheld payment or paid into a disputed payment account the amounts associated with these NPM Adjustments.

Notwithstanding provisions in the MSA requiring arbitration, litigation was filed in 49 Settling States regarding whether the application of the NPM Adjustment for 2003 was to be determined through litigation or arbitration. These actions related to the potential NPM Adjustment for 2003, which the independent auditor under the MSA previously determined to be as much as $1,200,000 for all Participating Manufacturers. All but one of the 48 courts that decided the issue ruled that the 2003 NPM Adjustment dispute was arbitrable. One court, the Montana Supreme Court, ruled that Montana’s claim of diligent enforcement must be litigated. The United States Supreme Court denied certiorari with respect to that opinion. In June 2012, Montana and the Participating Manufacturers reached an agreement that the Participating Manufacturers will not contest Montana's diligent enforcement for 2003.

In response to a proposal from the OPMs and many of the SPMs, 45 of the Settling States, representing approximately 90% of the allocable share of the Settling States, entered into an agreement providing for a nationwide arbitration of the dispute with respect to the NPM Adjustment for 2003. Because states representing more than 80% of the allocable share signed the agreement, signing states will receive a 20% reduction of any 2003 NPM adjustment awarded in the arbitration. In June 2010, the three person arbitration panel was selected. In November 2011, the Participating Manufacturers advised the arbitration panel that they were not contesting diligent enforcement of 16 Settling States. Substantive hearings commenced in April 2012 and were completed in June 2013. Decisions from the arbitration panel are pending. There can be no assurance that Liggett or Vector Tobacco will receive any adjustment as a result of these proceedings, other than as described below in connection with the settlement reached with certain Settling States.

Effective December 17, 2012, the Participating Manufacturers entered into a “term sheet” with 20 Settling States setting out terms for settlement of the NPM Adjustment for 2003 through 2012 and addressing the NPM Adjustment mechanism for those states for future years. Certain non-signatory states objected to the settlement. In March 2013, the arbitration panel entered a Stipulated Partial Settlement and Award which, among other things, overrules the objections of the non-signatory states and directed the independent auditor to implement the terms of the term sheet effective with the April 15, 2013 MSA payments. In May 2013, two additional states joined the settlement. Several non-signatory states are attempting to vacate the settlement award by filing state court actions. Although certain terms of the settlement were implemented by the independent auditor on April 15, 2013, no assurance can be given as to the ultimate outcome of the non-signatory states' challenges.

As a result of the settlement, in the first quarter of 2013 Liggett and Vector Tobacco recognized income of $5,602. Following the additional two states joining the settlement in May 2013, Liggett and Vector Tobacco recognized an additional $1,345 of income in the second quarter of 2013. The remaining NPM Adjustment accrual of $27,600 at June 30, 2013 relates to the disputed amounts Liggett and Vector Tobacco have withheld from the non-signatory states for 2004 through 2010. Approximately $16,600 remains in the disputed payments accounts relating to the dispute with these non-signatory states.

"Gross" v. "Net" Calculations.  In October 2004, the independent auditor notified Liggett and all other Participating Manufacturers that their payment obligations under the MSA, dating from the agreement’s execution in late 1998, had been recalculated using “net” units, rather than “gross” units (which had been used since 1999).

Liggett objected to this retroactive change and disputed the change in methodology. Liggett contends that the retroactive change from “gross” to “net” units is impermissible for several reasons, including:

• use of “net” units is not required by the MSA (as reflected by, among other things, the use of “gross” units through 2005);

• such a change is not authorized without the consent of affected parties to the MSA;

• the MSA provides for four-year time limitation periods for revisiting calculations and determinations, which precludes recalculating Liggett’s 1997 Market Share (and thus, Liggett’s market share exemption); and

• Liggett and others have relied upon the calculations based on “gross” units since 1998.

The change in the method of calculation could have resulted in Liggett owing as much as $38,800 of additional MSA payments for prior years, including interest, because the proposed change from “gross” to “net” units would have lowered Liggett’s grandfathered market share exemption under the MSA. The Company estimated that Liggett’s future annual MSA payments would have been at least approximately $2,500 higher if the method of calculation was changed. In August 2011, Liggett received notice from several states seeking to initiate arbitration as to this matter. In December 2012, the parties arbitrated the dispute before a panel of three arbitrators. On February 14, 2013, the arbitrators issued a decision granting the relief sought by Liggett.  The arbitrators ruled that the limitations provisions of the MSA precluded the independent auditor from recalculating Liggett's grandfathered market share exemption or Liggett's payment obligations beyond the last four years.  The arbitrators further ruled that, for purposes of calculating Liggett's payment obligations for the applicable years, Liggett's market share should be calculated on a net basis, increased by a factor of 1.25%.  Liggett filed a motion seeking reconsideration of the part of the arbitrators' decision that would require the 1.25% increase in Liggett's market share. The states objected to Liggett's motion and seek additional relief from the panel declaring that any adjustment ordered by the panel is not limited by the four year limitations set forth in the MSA. If the arbitrator's ruling is not modified, Liggett would be required to pay approximately $16,200 for the previous five years. If the relief requested by the states is granted, Liggett could be required to pay up to approximately $36,200. The panel had agreed to hear arguments on the motions on May 29, 2013, but due to the conditional settlement described below, the parties agreed to adjourn the hearing. In June 2013, Liggett and a negotiating group on behalf of the Settling States reached an agreement in principle to resolve all disputes regarding "gross" v. "net", subject to definitive documentation and approval thereof by each Settling State. The proposed settlement requires that Liggett pay $8,000 to the Settling States and agree to reduce its market share exemption from 1.645% to 1.63% starting in 2013 and for all years thereafter. In exchange, the Settling States will release Liggett from all claims in connection with the "gross" v. "net" dispute. The Company previously accrued $9,300 for the “gross” v. “net” dispute. There can be no assurance that the settlement will be approved and if it is not, that Liggett will be successful in seeking modification of the award by the panel or that Liggett will not be required to make additional payments, which could adversely affect the Company’s consolidated financial position, results of operations and cash flows.

Litigation Challenging the MSA.  Litigation challenging the validity of the MSA, including claims that the MSA violates antitrust laws, has not been successful to date, although several cases are pending. Participating Manufacturers are not typically named as defendants in these cases.

Other State Settlements.  The MSA replaced Liggett’s prior settlements with all states and territories except for Florida, Mississippi, Texas and Minnesota. Each of these four states, prior to the effective date of the MSA, negotiated and executed settlement agreements with each of the other major tobacco companies, separate from those settlements reached previously with Liggett. Except as described below, Liggett's agreements with these states remain in full force and effect. These states' settlement agreements with Liggett contained most favored nation provisions which could reduce Liggett's payment obligations based on subsequent settlements or resolutions by those states with certain other tobacco companies. Beginning in 1999, Liggett determined that, based on each of these four states' settlements with United States Tobacco Company, Liggett's payment obligations to those states had been eliminated. With respect to all non-economic obligations under the previous settlements, Liggett believes it is entitled to the most favorable provisions as between the MSA and each state's respective settlement with the other major tobacco companies. Therefore, Liggett's non-economic obligations to all states and territories are now defined by the MSA.

In 2003, as a result of a dispute with Minnesota regarding its settlement agreement, Liggett agreed to pay $100 a year, in any year cigarettes manufactured by Liggett are sold in that state. In 2003 and 2004, the Attorneys General for Florida, Mississippi and Texas advised Liggett that they believed that Liggett had failed to make certain required payments under the respective settlement agreements with these states. In December 2010, Liggett settled with Florida and agreed to pay $1,200 and to make further annual payments of $250 for a period of 21 years, starting in March 2011. The payments in years 12 – 21 will be subject to an inflation adjustment. These payments are in lieu of any other payments allegedly due to Florida under the original settlement agreement. The Company accrued approximately $3,200 for this matter in 2010. In February 2012, Mississippi provided Liggett with a 60-day notice that the state intended to pursue its remedies if Liggett did not cure the alleged defaults. Liggett responded to Mississippi's letter denying the existence of any defaults. There can be no assurance that Liggett will be able to resolve the matters with Texas and Mississippi or that Liggett will not be required to make additional payments which could adversely affect the Company's consolidated financial position, results of operations and cash flows.

Cautionary Statement.  Management is not able to predict the outcome of the litigation pending or threatened against Liggett or the Company. Litigation is subject to many uncertainties. Through June 30, 2013, Liggett has been found liable in tenEngle progeny cases. In three of the cases, the verdicts were affirmed on appeal and the judgments were satisfied by Liggett. Although Liggett has appealed the remaining adverse verdicts, appellate efforts to date have not been successful. Liggett has also had judgments entered against it in Individual Actions, which were affirmed on appeal and satisfied by Liggett. It is possible that other cases could be decided unfavorably against Liggett and that Liggett will be unsuccessful on appeal. Liggett may attempt to settle particular cases if it believes it is in its best interest to do so.

Management cannot predict the cash requirements related to any future defense costs, settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. An unfavorable outcome of a pending smoking-related case could encourage the commencement of additional litigation, or could lead to adverse decisions in the Engle progeny cases. Except as discussed in this Note 6, management is unable to estimate the loss or range of loss that could result from an unfavorable outcome of the cases pending against Liggett or the costs of defending such cases and as a result has not provided any amounts in its consolidated financial statements for unfavorable outcomes.

The tobacco industry is subject to a wide range of laws and regulations regarding the marketing, sale, taxation and use of tobacco products imposed by local, state and federal governments. There have been a number of restrictive regulatory actions, adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry. These developments may negatively affect the perception of potential triers of fact with respect to the tobacco industry, possibly to the detriment of certain pending litigation, and may prompt the commencement of additional litigation or legislation.

It is possible that the Company’s consolidated financial position, results of operations and cash flows could be materially adversely affected by an unfavorable outcome in any of the smoking-related litigation.

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2013 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement			Litigation Accruals			Total
Balance at January 1, 2013	$	32,970		$	1,470		$	34,440		$	52,639		$	1,862		$	54,501
Expenses	56,907			147			57,054			—			—			—
NPM Settlement adjustment	—			—			—			(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	364			—			364			—			—			—
Payments	(34,077		)	(1,577		)	(35,654		)	—			—			—
Reclassification from non-current liabilities	3,521			223			3,744			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			18			18			—			99			99
Balance as of June 30, 2013	$	59,685		$	281		$	59,966		$	35,630		$	1,738		$	37,368

The activity in the Company's accruals for tobacco litigation for the six months ended June 30, 2012 were as follows:

	Current Liabilities									Non-Current Liabilities
	Payments due under Master Settlement Agreement			Litigation Accruals			Total			Payments due under Master Settlement Agreement		Litigation Accruals			Total
Balance at January 1, 2012	$	51,174		$	1,551		$	52,725		$	49,338	$	1,600		$	50,938
Expenses	69,956			179			70,135			—		—			—
Change in MSA obligations capitalized as inventory	173			—			173			—		—			—
Payments	(50,094		)	(574		)	(50,668		)	—		—			—
Reclassification from non-current liabilities	(905		)	224			(681		)	905		(224		)	681
Interest on withholding	—			24			24			1,172		385			1,557
Balance as of June 30, 2012	$	70,304		$	1,404		$	71,708		$	51,415	$	1,761		$	53,176

Other Matters:

Liggett’s and Vector Tobacco’s management are unaware of any material environmental conditions affecting their existing facilities. Liggett’s and Vector Tobacco’s management believe that current operations are conducted in material compliance with all environmental laws and regulations and other laws and regulations governing cigarette manufacturers. Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect on the capital expenditures, results of operations or competitive position of Liggett or Vector Tobacco.

In February 2004, Liggett Vector Brands entered into a five year agreement with a subsidiary of the American Wholesale Marketers Association to support a program to permit certain tobacco distributors to secure, on reasonable terms, tax stamp bonds required by state and local governments for the distribution of cigarettes. This agreement has been extended through February 2016. Under the agreement, Liggett Vector Brands has agreed to pay a portion of losses incurred by the surety under the bond program, with a maximum loss exposure of $500 for Liggett Vector Brands. To secure its potential obligations under the agreement, Liggett Vector Brands has delivered to the subsidiary of the association a $100 letter of credit and agreed to fund up to an additional $400. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at June 30, 2013.

There may be several other proceedings, lawsuits and claims pending against the Company and certain of its consolidated subsidiaries unrelated to tobacco or tobacco product liability. Management is of the opinion that the liabilities, if any, ultimately resulting from such other proceedings, lawsuits and claims should not materially affect the Company’s financial position, results of operations or cash flows.

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Tax portion of revenues and cost of goods sold	$ 112,596	$ 130,967	$ 221,507	$ 252,892

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Segment Reporting Information [Line Items]
Revenues	$ 249,120	[1]	$ 276,594	[1]	$ 489,522	[1]	$ 534,200	[1]
Operating income (loss)	44,240		40,928		87,336		74,374
Depreciation and amortization	2,637		2,539		5,233		5,310
Capital expenditures					5,995		7,394
Tobacco [Member]
Segment Reporting Information [Line Items]
Revenues	249,120		276,594		489,522		534,200
Operating income (loss)	48,294	[2]	44,590		95,454	[3]	82,105
Depreciation and amortization	2,368		2,383		4,753		4,878
Capital expenditures					3,319		6,334
Real Estate [Member]
Segment Reporting Information [Line Items]
Revenues	0		0		0		0
Operating income (loss)	(407)		(249)		(321)		272
Depreciation and amortization	152		88		280		173
Capital expenditures					429		99
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenues	0		0		0		0
Operating income (loss)	(3,647)		(3,413)		(7,797)		(8,003)
Depreciation and amortization	117		68		200		259
Capital expenditures					2,247		961
Real Estate Investment [Member]
Segment Reporting Information [Line Items]
Equity income from non-consolidated real estate businesses	6,804		5,232		7,285		8,095
Real Estate Investment [Member] | Tobacco [Member]
Segment Reporting Information [Line Items]
Equity income from non-consolidated real estate businesses	0		0		0		0
Real Estate Investment [Member] | Real Estate [Member]
Segment Reporting Information [Line Items]
Equity income from non-consolidated real estate businesses	6,804		5,232		7,285		8,095
Real Estate Investment [Member] | Corporate and Other [Member]
Segment Reporting Information [Line Items]
Equity income from non-consolidated real estate businesses	0		0		0		0
NPM Adjustment [Member]
Segment Reporting Information [Line Items]
Gain (loss) related to litigation settlement	$ 1,345				$ 6,947

[1] Revenues and Cost of goods sold include excise taxes of $112,596, $130,967, $221,507 and $252,892, respectively.

[2] Operating income includes $1,345 of income from a NPM Settlement.(2) Operating income includes $6,947 of income from NPM Settlements.

[3] Operating income includes $6,947 of income from NPM Settlements.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 281,713	$ 405,855
Investment securities available for sale	134,141	69,984
Accounts receivable - trade, net	12,495	11,247
Inventories	96,761	100,392
Deferred income taxes	32,017	36,609
Income taxes receivable, net	16,631	6,779
Restricted assets	1,241	2,469
Other current assets	5,220	5,721
Total current assets	580,219	639,056
Property, plant and equipment, net	58,067	57,153
Investment in consolidated real estate businesses, net	23,200	13,295
Long-term investments accounted for at cost	21,292	16,367
Long-term investments accounted for under the equity method	6,671	6,432
Investments in non-consolidated real estate businesses	142,878	119,219
Restricted assets	12,288	9,792
Deferred income taxes	54,140	49,142
Intangible asset	107,511	107,511
Prepaid pension costs	13,787	12,870
Other assets	49,490	55,894
Total assets	1,069,543	1,086,731
Current liabilities:
Current portion of notes payable and long-term debt	33,906	36,778
Current payments due under the Master Settlement Agreement	59,685	32,970
Current portion of employee benefits	2,824	2,824
Accounts payable	5,920	6,099
Accrued promotional expenses	17,618	18,730
Income taxes payable	6,423	6,269
Accrued excise and payroll taxes payable, net	1,208	20,419
Litigation accruals	281	1,470
Deferred income taxes	32,030	27,299
Accrued interest	22,398	25,410
Other current liabilities	13,080	16,891
Total current liabilities	195,373	195,159
Notes payable, long-term debt and other obligations, less current portion	638,352	586,946
Fair value of derivatives embedded within convertible debt	166,629	172,128
Non-current employee benefits	46,377	45,860
Deferred income taxes	112,444	109,532
Payments due under the Master Settlement Agreement	35,630	52,639
Litigation accruals	1,738	1,862
Other liabilities	2,502	1,857
Total liabilities	1,199,045	1,165,983
Commitments and contingencies
Stockholders' deficiency:
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized	0	0
Common stock, par value $0.10 per share, 150,000,000 shares authorized, 93,708,273 and 93,658,273 shares issued and 89,948,411 and 89,898,411 shares outstanding	8,994	8,989
Additional paid-in capital	0	0
Accumulated deficit	(123,554)	(65,116)
Accumulated other comprehensive loss	(3,232)	(10,268)
Less: 3,759,862 shares of common stock in treasury, at cost	(12,857)	(12,857)
Total Vector Group Ltd. stockholders' deficiency	(130,649)	(79,252)
Non-controlling interest	1,147	0
Total stockholders' deficiency	(129,502)	(79,252)
Total liabilities and stockholders' deficiency	$ 1,069,543	$ 1,086,731

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New Valley LLC (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended					3 Months Ended		6 Months Ended																														3 Months Ended	6 Months Ended			6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 New Valley LLC [Member]	Dec. 31, 2012 New Valley LLC [Member]	Jun. 30, 2013 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Jun. 30, 2012 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Jun. 30, 2012 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 Douglas Elliman Realty Formerly Prudential [Member] Douglas Elliman Realty LLC [Member]	Jun. 30, 2013 Sesto Holdings S r. l. [Member] New Valley LLC [Member]	Dec. 31, 2012 Sesto Holdings S r. l. [Member] New Valley LLC [Member]	Jun. 30, 2013 1107 Broadway [Member] New Valley LLC [Member]	Dec. 31, 2012 1107 Broadway [Member] New Valley LLC [Member]	Jun. 30, 2013 Lofts 21 LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 Lofts 21 LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 Hotel Taiwana LLC [Member] New Valley LLC [Member]	Apr. 30, 2013 Hotel Taiwana LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 Hotel Taiwana LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 HFZ East 68th Street [Member] New Valley LLC [Member]	Dec. 31, 2012 HFZ East 68th Street [Member] New Valley LLC [Member]	Jun. 30, 2013 11 Beach Street Investor LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 11 Beach Street Investor LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 NV Maryland LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 NV Maryland LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 NV 701 Seventh Avenue LLC [Member] New Valley LLC [Member]	Dec. 31, 2012 NV 701 Seventh Avenue LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 Queens Plaza [Member] New Valley LLC [Member]	Dec. 31, 2012 Queens Plaza [Member] New Valley LLC [Member]	Jun. 30, 2013 Chrystie Street [Member] New Valley LLC [Member]	Dec. 31, 2012 Chrystie Street [Member] New Valley LLC [Member]	Jun. 30, 2013 Leroy Street [Member] New Valley LLC [Member]	Dec. 31, 2012 Leroy Street [Member] New Valley LLC [Member]	Jun. 30, 2013 101 Murray Street [Member] New Valley LLC [Member]	May 31, 2013 101 Murray Street [Member] New Valley LLC [Member] units story sqft	Dec. 31, 2012 101 Murray Street [Member] New Valley LLC [Member]	Jun. 30, 2013 New Valley Oaktree Chelsea Eleven LLC [Member] New Valley LLC [Member]	Jun. 30, 2012 New Valley Oaktree Chelsea Eleven LLC [Member] New Valley LLC [Member]	Jun. 30, 2013 Indian Creek [Member] New Valley LLC [Member]	Mar. 31, 2013 Indian Creek [Member] New Valley LLC [Member]	Jun. 30, 2013 Indian Creek [Member] Noncontrolling Interest [Member]	Jul. 31, 2013 Subsequent Event [Member] 101 Murray Street [Member] New Valley LLC [Member] story units	Mar. 31, 2013 London Interbank Offered Rate (LIBOR) [Member] Indian Creek [Member] New Valley LLC [Member]
Schedule of Investments [Line Items]
Investments in non-consolidated real estate businesses	$ 142,878		$ 119,219	$ 142,878	$ 119,219	$ 69,974		$ 69,974		$ 65,171		$ 5,037	$ 5,037	$ 6,579	$ 5,566	$ 900	$ 900	$ 6,313		$ 2,658	$ 7,000	$ 7,000	$ 10,508	$ 9,642	$ 4,206	$ 4,615	$ 9,888	$ 9,307	$ 7,350	$ 7,350	$ 1,992	$ 1,973	$ 1,150	$ 0	$ 11,981		$ 0				$ 7,616
Equity income from non-consolidated real estate businesses						6,815	4,929	7,438	6,373																													451	2,118
Distributions from non-consolidated real estate businesses	0	6,221				1,311	564	2,636	2,889																														8,439	3,080		767
Number of units in real estate property																																				150							605
Ownership percentage										50.00%	20.00%																									25.00%					80.00%		18.00%
Maximum exposure to loss as a result of this investment																																						0
Additional real estate investment to be made																		567	3,088																11,981								7,275
Land and building																																									9,719
Line of credit facility maximum borrowing capacity																																									8,400
Basis spread on variable rate																																												2.50%
Line of credit																																									3,570
Minority interest	1,147		0																																						1,147
Equity interest	$ (129,502)		$ (79,252)																																						$ 4,576
Number of stories in real estate property																																				15							47
Area of real estate property																																				31,000
Term of development																																											30 months
Interest Rate																																			12.00%

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New Valley LLC (Tables)

6 Months Ended

Jun. 30, 2013

New Valley LLC [Abstract]

Investments In non-consolidated real estate businesses

The components of “Investments in non-consolidated real estate businesses” were as follows:

	June 30, 2013		December 31, 2012
Douglas Elliman Realty LLC	$	69,974	$	65,171
Sesto Holdings	5,037		5,037
1107 Broadway	6,579		5,566
Lofts 21	900		900
Hotel Taiwana	6,313		2,658
East 68th Street	7,000		7,000
11 Beach Street	10,508		9,642
Maryland Portfolio	4,206		4,615
701 Seventh Avenue	9,888		9,307
Queens Plaza	7,350		7,350
Chrystie Street	1,992		1,973
Leroy Street	1,150		—
101 Murray Street	11,981		—
Investments in non-consolidated real estate businesses	$	142,878	$	119,219

Summarized financial information of Douglas Elliman Realty, LLC

The summarized financial information of Douglas Elliman Realty, LLC is as follows:

	June 30, 2013		December 31, 2012
Cash	$	89,491	$	78,015
Other current assets	8,665		8,543
Property, plant and equipment, net	15,645		15,796
Trademarks	21,663		21,663
Goodwill	38,539		38,523
Other intangible assets, net	785		897
Other non-current assets	3,420		3,182
Notes payable - current	378		466
Other current liabilities	62,380		22,065
Notes payable - long term	283		334
Other long-term liabilities	9,420		9,614
Members' equity	105,747		134,140

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Revenues	$	113,647		$	97,955	$	188,184		$	169,130
Costs and expenses	100,093			88,568		173,707			157,794
Depreciation expense	985			831		1,958			1,646
Amortization expense	55			61		111			121
Other income	261			490		403			1,232
Interest (income) expense, net	(8		)	9		(8		)	32
Income tax expense	301			269		242			323
Net income	$	12,482		$	8,707	$	12,577		$	10,446

Schedule of consolidated real sstate investments

Consolidated real estate investments:

The components of “Investments in consolidated real estate businesses, net” were as follows:

	June 30, 2013		December 31, 2012
Escena, net	$	13,139	$	13,295
Indian Creek	10,061		—
Investment in consolidated real estate businesses, net	$	23,200	$	13,295

Investment in Escena

Investment in Escena. The components of the Company's investment in Escena are as follows:

	June 30, 2013			December 31, 2012
Land and land improvements	$	11,430		$	11,430
Building and building improvements	1,530			1,530
Other	1,403			1,374
	14,363			14,334
Less accumulated depreciation	(1,224		)	(1,039		)
	$	13,139		$	13,295

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Inventories (Tables)

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories consist of:

	June 30, 2013			December 31, 2012
Leaf tobacco	$	48,425		$	59,130
Other raw materials	4,534			3,151
Work-in-process	396			210
Finished goods	68,916			64,396
Inventories at current cost	122,271			126,887
LIFO adjustments	(25,510		)	(26,495		)
	$	96,761		$	100,392

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Notes Payable, Long Term Debt and Other Obligations Non Cash Interest Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Debt Disclosure [Abstract]
Amortization of debt discount	$ 8,464	$ 4,004	$ 15,812	$ 7,441
Amortization of deferred finance costs	447	751	1,044	1,461
Loss on extinguishment of 11% Senior Secured Notes	0	0	3,638	0
Accelerated interest expense on 3.875% Variable Interest Senior Convertible Debentures converted	0	7,888	0	7,888
Non-cash Interest Expense	$ 8,911	$ 12,643	$ 20,494	$ 16,790

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New Valley LLC Investment in Escena (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Investment Holdings [Line Items]
Operating income (loss)	$ 44,240	$ 40,928	$ 87,336	$ 74,374
Escena [Member] | New Valley LLC [Member]
Investment Holdings [Line Items]
Land and land improvements	11,430		11,430		11,430
Building and building improvements	1,530		1,530		1,530
Other	1,403		1,403		1,374
Total Investment in Escena before depreciation	14,363		14,363		14,334
Less accumulated depreciation	(1,224)		(1,224)		(1,039)
Investment in Escena, net	13,139		13,139		13,295
Operating income (loss)	$ (307)	$ (123)	$ 76	$ 487

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Investment Securities Available for Sale (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value	$ 134,141
Cost	100,559
Gross Unrealized Gain	35,050
Gross Unrealized Loss	(1,468)
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value	86,691
Cost	52,921
Gross Unrealized Gain	34,700
Gross Unrealized Loss	(930)
Fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value	47,450
Cost	47,638
Gross Unrealized Gain	350
Gross Unrealized Loss	$ (538)

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Summary of Significant Accounting Policies Antidilutive Securities Excluded from Earnings Per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Number of stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)				2,299,640
Weighted-average exercise price (dollars per share)				$ 13.09
Weighted-average shares of non-vested restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	53,500	3,500	53,500	383,587
Weighted-average expense per share (dollars per share)	$ 16.36	$ 17.12	$ 16.36	$ 10.86
Weighted-average number of shares issuable upon conversion of debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	26,962,402	17,854,218	26,962,402	18,017,309
Weighted-average conversion price (dollars per share)	$ 15.98	$ 14.09	$ 15.98	$ 14.10

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Summary of Significant Accounting Policies Textuals (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Sep. 28, 2012
Accounting Policies [Abstract]
Stock dividend paid to company stockholders			5.00%
Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	$ 166,629	$ 172,128
Minimum [Member]
Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	163,949	169,424
Maximum [Member]
Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	$ 169,391	$ 174,909

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Notes Payable, Long Term Debt and Other Obligations

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

Notes payable, long-term debt and other obligations consist of:

	June 30, 2013			December 31, 2012
Vector:
7.75% Senior Secured Notes due 2021	$	450,000		$	—
11% Senior Secured Notes due 2015, net of unamortized discount of $0 and $408	—			414,592
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $25,883 and $30,383*	24,117			19,617
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $36,646 and $45,038*	70,884			62,492
3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $35,998 and $36,107*	7,224			7,115
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $159,009 and $161,795*	70,991			68,205
Liggett:
Revolving credit facility	27,034			29,430
Term loan under credit facility	4,032			4,179
Equipment loans	14,211			17,810
Other	3,765			284
Total notes payable, long-term debt and other obligations	672,258			623,724
Less:
Current maturities	(33,906		)	(36,778		)
Amount due after one year	$	638,352		$	586,946

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($9,007 at June 30, 2013 and $11,682 at December 31, 2012, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($17,075 at June 30, 2013 and $22,146 at December 31, 2012, respectively), the 3.875% Variable Interest Senior Convertible Debentures ($42,985 at June 30, 2013 and $39,714 at December 31, 2012, respectively), and the 7.50% Variable Interest Senior Convertible Debentures ($97,562 at June 30, 2013 and $98,586 at December 31, 2012, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

Credit Facility - Liggett:

In February 2012, Liggett and Wells Fargo Bank, National Association ("Wells Fargo") renewed the $50,000 credit facility (the "Credit Facility"). The Credit Facility is collateralized by all inventories and receivables of Liggett and a mortgage on its manufacturing facility. The Credit Facility expires on March 8, 2015; provided that Liggett may terminate the Credit Facility prior to March 8, 2015 at any time by giving at least 30 days prior written notice to Wells Fargo, and Wells Fargo may, at Well Fargo's option, terminate the Credit Facility at any time upon the occurrence and during the continuance of an Event of Default.

Prime rate loans under the Credit Facility bear interest at a rate equal to the prime rate of Wells Fargo and Eurodollar rate loans bear interest at a rate equal to 2.0% more than Wells Fargo's adjusted Eurodollar rate. The Credit Facility contains covenants that provide that Liggett's earnings before interest, taxes, depreciation and amortization, as defined under the Credit Facility, on a trailing twelve month basis, shall not be less than $100,000 if Liggett's Excess Availability, as defined under the Credit Facility, is less than $20,000. The covenants also require that annual Capital Expenditures, as defined under the Credit Facility (before a maximum carryover amount of $2,500), shall not exceed $15,000 during any fiscal year.

Term Loan under Credit Facility - Liggett:

In February 2012, Wells Fargo amended and restated the existing $5,600 term loan (the “Term Loan”) made to 100 Maple LLC (“Maple”), a subsidiary of Liggett, within the commitment under the Credit Facility. In connection with the amendment and restatement the maturity date of the Term Loan was extended to March 1, 2015 and the outstanding principal amount was paid down to $4,425. The Term Loan bears an interest rate equal to 1.75% more than Wells Fargo's adjusted Eurodollar rate. Monthly payments of $25 are due under the Term Loan from March 1, 2012 to February 1, 2015 ($885 in total) with the balance of $3,540 due at maturity on March 1, 2015.

The Term Loan is collateralized by the existing collateral securing the Credit Facility, including, without limitation, certain real property owned by Maple. The Term Loan did not increase the $50,000 borrowing amount of the Credit Facility, but did increase the outstanding amounts under the Credit Facility by the amount of the term loan and proportionately reduces the maximum borrowing availability under the Credit Facility.

As of June 30, 2013, a total of $31,066 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the facility was approximately $18,934 based on eligible collateral at June 30, 2013.

7.75% Senior Secured Notes due 2021 - Vector:

In February 2013, the Company issued $450,000 of its 7.75% Senior Secured Notes due 2021 in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. The aggregate net proceeds from the issuance of the 7.75% Senior Secured Notes were approximately $438,250 after deducting offering expenses. The Company used the net proceeds of the issuance for a cash tender offer announced on January 29, 2013, with respect to any and all of its outstanding 11% Senior Secured Notes due 2015. The Company retired $336,315 of the 11% Senior Secured Notes at a premium of 104.292%, plus accrued and unpaid interest on February 12, 2013. The remaining $78,685 of the 11% Senior Secured Notes were called and retired on March 14, 2013 at a redemption price of 103.667% plus accrued and unpaid interest.

The 7.75% Senior Secured Notes pay interest on a semi-annual basis at a rate of 7.75% per year and mature on February 15, 2021. The Company may redeem some or all of the 7.75% Senior Secured Notes at any time prior to February 15, 2016 at a make-whole redemption price. On or after February 15, 2016 the Company may redeem some or all of the 7.75% Senior Secured Notes at a premium that will decrease over time, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date. At any time prior to February 15, 2016, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 7.75% Senior Secured Notes with the net proceeds of certain equity offerings at 107.75% of the aggregate principal amount thereof, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date. In the event of a change of control, as defined in the indenture governing the 7.75% Senior Secured Notes, each holder of the 7.75% Senior Secured Notes may require the Company to repurchase some or all of its 7.75% Senior Secured Notes at a repurchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest and liquidated damages, if any to the date of purchase.

The 7.75% Senior Secured Notes are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of the Company’s cigarette businesses. (See Note 12.) In addition, some of the guarantees are collateralized by second priority or first priority security interests in certain collateral of some of the subsidiary guarantors, including their common stock, pursuant to security and pledge agreements.

 In connection with the issuance of the 7.75% Senior Secured Notes, the Company entered into a Registration Rights Agreement. The Company agreed to consummate a registered exchange offer for the 7.75% Senior Secured Notes within 360 days after the date of the initial issuance of the 7.75% Senior Secured Notes. In June 2013, the Company completed an offer to exchange the 7.75% Senior Secured Notes issued in February 2013 for an equal amount of newly issued 7.75% Senior Secured Notes due 2021. The new 7.75% Senior Secured Notes have substantially the same terms as the original notes, except that the new 7.75% Senior Secured Notes have been registered under the Securities Act.

The indenture contains covenants that restrict the payment of dividends by the Company if the Company's consolidated earnings before interest, taxes, depreciation and amortization, as defined in the indenture, for the most recently ended four full quarters is less than $75,000. The indenture also restricts the incurrence of debt if the Company's Leverage Ratio and its Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively. The Company's Leverage Ratio is defined in the indenture as the ratio of the Company's and the guaranteeing subsidiaries' total debt less the fair market value of the Company's cash, investments in marketable securities and long-term investments to Consolidated EBITDA, as defined in the indenture. The Company's Secured Leverage Ratio is defined in the indenture in the same manner as the Leverage Ratio, except that secured indebtedness is substituted for indebtedness.

11% Senior Secured Notes due 2015 - Vector:

On January 29, 2013, the Company announced a cash tender offer with respect to any and all of its outstanding $415,000 principal amount of its 11% Senior Secured Notes due 2015. The Company retired $336,315 of the 11% Senior Secured Notes at a premium of 104.292%, plus accrued and unpaid interest on February 12, 2013. The remaining $78,685 of the 11% Senior Secured Notes were called and retired on March 14, 2013 at a redemption price of 103.667% plus accrued and unpaid interest. The Company recorded a loss on the extinguishment of the debt of $21,458 for the six months ended June 30, 2013. The loss included premium and tender costs of $17,820 and non-cash interest expense of $3,638 related to the write-off of net unamortized debt discount and deferred finance costs.

3.875% Variable Interest Senior Convertible Debentures due 2026 - Vector:

Holders of the Debentures converted $2 principal amount of the Debentures into 131 shares of the Company's common stock in February 2012 and $31,370 principal amount into 2,053,065 shares of common stock in June 2012. The Company recorded non-cash accelerated interest expense related to the converted debt of $7,888 for the three and six months ended June 30, 2012. The debt conversion resulted in a reclassification from debt to equity in the amount of $31,372. As of June 30, 2012, the principal amount of the Debentures outstanding was $67,628.

The holders of the Debentures had the option to put all of the remaining senior convertible notes on June 15, 2012. None of the Debentures were surrendered for repurchase by the Company. The holders of the Debentures next have the option to put all or part of the remaining Debentures to the Company on June 15, 2016. Accordingly, the Company reclassified the Debentures and related fair value of derivatives embedded within convertible debt from current liabilities to long-term liabilities.

Non-cash Interest Expense - Vector:

Components of non-cash interest expense are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Amortization of debt discount	$	8,464	$	4,004	$	15,812	$	7,441
Amortization of deferred finance costs	447		751		1,044		1,461
Loss on extinguishment of 11% Senior Secured Notes	—		—		3,638		—
Accelerated interest expense on 3.875% Variable Interest Senior Convertible Debentures converted	—		7,888		—		7,888
	$	8,911	$	12,643	$	20,494	$	16,790

Fair Value of Notes Payable and Long-term Debt:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	672,258	$	1,030,462	$	623,724	$	963,672

Notes payable and long-term debt are carried on the condensed balance sheet at amortized cost. The fair value determination disclosed above would be classified as Level 2 under the fair value hierarchy disclosed in Note 9 if such liabilities were recorded on the condensed balance sheet at fair value. The estimated fair value of the Company's notes payable and long-term debt has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company's credit risk as described in Note 1. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein are not necessarily indicative of the amount that could be realized in a current market exchange.

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Condensed Consolidating Financial Information Statements of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	$ 5,190	$ 57,829
Cash flows from investing activities:
Sale of investment securities	43,115	0
Purchase of investment securities	(90,368)	(1,148)
Proceeds from sale or liquidation of long-term investments	75	72
Purchase of long-term investments	(5,000)	(5,000)
Investments in non-consolidated real estate businesses	(19,048)	(9,667)
Investments in consolidated real estate businesses	(7,657)	0
Distributions from non-consolidated real estate businesses	0	6,221
Increase in cash surrender value of life insurance policies	(303)	(620)
Increase in restricted assets	(1,268)	(53)
Issuance of notes receivable	0	(234)
Proceeds from sale of fixed assets	13	404
Investments in subsidiaries	0	0
Capital expenditures	(5,995)	(7,394)
Repayments of notes receivable	8,433	0
Net cash used in investing activities	(78,003)	(17,419)
Cash flows from financing activities:
Proceeds from debt issuance	453,080	14,018
Deferred financing costs	(11,663)	(315)
Repayments of debt	(418,833)	(13,493)
Borrowings under revolver	474,493	525,350
Repayments on revolver	(476,888)	(532,082)
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(71,518)	(66,112)
Proceeds from exercise of Vector options	0	45
Tax benefits from exercise of Vector options	0	4
Net cash used in financing activities	(51,329)	(72,585)
Net decrease in cash and cash equivalents	(124,142)	(32,175)
Cash and cash equivalents, beginning of period	405,855	240,923
Cash and cash equivalents, end of period	281,713	208,748
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	5,204	22,900
Cash flows from investing activities:
Sale of investment securities	36,533
Purchase of investment securities	(79,368)	0
Proceeds from sale or liquidation of long-term investments	0	0
Purchase of long-term investments	(5,000)	(5,000)
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated real estate businesses	0
Distributions from non-consolidated real estate businesses		0
Increase in cash surrender value of life insurance policies	79	(425)
Increase in restricted assets	6	268
Issuance of notes receivable		(234)
Proceeds from sale of fixed assets	0	393
Investments in subsidiaries	(43,584)	(1,008)
Capital expenditures	(2,247)	(961)
Repayments of notes receivable	8,433
Net cash used in investing activities	(85,148)	(6,967)
Cash flows from financing activities:
Proceeds from debt issuance	450,000	0
Deferred financing costs	(11,663)	0
Repayments of debt	(415,000)	0
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(71,518)	(66,112)
Proceeds from exercise of Vector options		45
Tax benefits from exercise of Vector options		4
Net cash used in financing activities	(48,181)	(66,063)
Net decrease in cash and cash equivalents	(128,125)	(50,130)
Cash and cash equivalents, beginning of period	401,344	238,262
Cash and cash equivalents, end of period	273,219	188,132
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	57,823	74,473
Cash flows from investing activities:
Sale of investment securities	6,582
Purchase of investment securities	(11,000)	(1,148)
Proceeds from sale or liquidation of long-term investments	0	0
Purchase of long-term investments	0	0
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated real estate businesses	0
Distributions from non-consolidated real estate businesses		0
Increase in cash surrender value of life insurance policies	(382)	(195)
Increase in restricted assets	(1,274)	(321)
Issuance of notes receivable		0
Proceeds from sale of fixed assets	13	11
Investments in subsidiaries	0	0
Capital expenditures	(3,319)	(6,334)
Repayments of notes receivable	0
Net cash used in investing activities	(9,380)	(7,987)
Cash flows from financing activities:
Proceeds from debt issuance	0	14,018
Deferred financing costs	0	(315)
Repayments of debt	(3,763)	(13,428)
Borrowings under revolver	474,493	525,350
Repayments on revolver	(476,888)	(532,082)
Capital contributions received	12,300	950
Intercompany dividends paid	(50,582)	(43,500)
Dividends and distributions on common stock	0	0
Proceeds from exercise of Vector options		0
Tax benefits from exercise of Vector options		0
Net cash used in financing activities	(44,440)	(49,007)
Net decrease in cash and cash equivalents	4,003	17,479
Cash and cash equivalents, beginning of period	3,776	2,488
Cash and cash equivalents, end of period	7,779	19,967
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	2,187	5,557
Cash flows from investing activities:
Sale of investment securities	0
Purchase of investment securities	0	0
Proceeds from sale or liquidation of long-term investments	75	72
Purchase of long-term investments	0	0
Investments in non-consolidated real estate businesses	(19,048)	(9,667)
Investments in consolidated real estate businesses	(7,657)
Distributions from non-consolidated real estate businesses		6,221
Increase in cash surrender value of life insurance policies	0	0
Increase in restricted assets	0	0
Issuance of notes receivable		0
Proceeds from sale of fixed assets	0	0
Investments in subsidiaries	0	0
Capital expenditures	(429)	(99)
Repayments of notes receivable	0
Net cash used in investing activities	(27,059)	(3,473)
Cash flows from financing activities:
Proceeds from debt issuance	3,080	0
Deferred financing costs	0	0
Repayments of debt	(70)	(65)
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	31,284	58
Intercompany dividends paid	(9,442)	(1,601)
Dividends and distributions on common stock	0	0
Proceeds from exercise of Vector options		0
Tax benefits from exercise of Vector options		0
Net cash used in financing activities	24,852	(1,608)
Net decrease in cash and cash equivalents	(20)	476
Cash and cash equivalents, beginning of period	735	173
Cash and cash equivalents, end of period	715	649
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	(60,024)	(45,101)
Cash flows from investing activities:
Sale of investment securities	0
Purchase of investment securities	0	0
Proceeds from sale or liquidation of long-term investments	0	0
Purchase of long-term investments	0	0
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated real estate businesses
Distributions from non-consolidated real estate businesses		0
Increase in cash surrender value of life insurance policies		0
Increase in restricted assets		0
Issuance of notes receivable		0
Proceeds from sale of fixed assets		0
Investments in subsidiaries	43,584	1,008
Capital expenditures		0
Net cash used in investing activities	43,584	1,008
Cash flows from financing activities:
Proceeds from debt issuance		0
Deferred financing costs		0
Repayments of debt		0
Borrowings under revolver		0
Repayments on revolver		0
Capital contributions received	(43,584)	(1,008)
Intercompany dividends paid	60,024	45,101
Dividends and distributions on common stock		0
Proceeds from exercise of Vector options		0
Tax benefits from exercise of Vector options		0
Net cash used in financing activities	16,440	44,093
Net decrease in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	$ 0	$ 0

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Investments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Company's recurring financial assets and liabilities subject to fair value measurements

The Company's recurring financial assets and liabilities subject to fair value measurements are as follows:

	Fair Value Measurements as of June 30, 2013
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	219,533	$	219,533	$	—	$	—
Certificates of deposit	2,234		—		2,234		—
Bonds	7,577		7,577		—		—
Investment securities available for sale							—
Equity securities	86,691		79,947		6,744		—
Fixed income securities
U.S. Government securities	10,094		—		10,094		—
Corporate securities	30,031		—		30,031		—
U.S. mortgage backed securities	589		—		589		—
Commercial mortgage-backed securities	5,886		—		5,886		—
U.S. asset backed securities	850		—		850		—
Total fixed income securities	47,450		—		47,450		—
Warrants	806		—		—		806
Total	$	364,291	$	307,057	$	56,428	$	806
Liabilities:
Fair value of derivatives embedded within convertible debt	166,629		—		—		166,629
Total	$	166,629	$	—	$	—	$	166,629

	Fair Value Measurements as of December 31, 2012
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	372,718	$	372,718	$	—	$	—
Certificates of deposit	2,240		—		2,240		—
Bonds	6,306		6,306		—		—
Investment securities available for sale:
Equity securities	69,984		69,107		877		—
Warrants	769		—		—		769
Total	$	452,017	$	448,131	$	3,117	$	769
Liabilities:
Fair value of derivatives embedded within convertible debt	172,128		—		—		172,128
Total	$	172,128	$	—	$	—	$	172,128

Unobservable inputs related to the valuations of the Level 3 assets and liabilities

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at June 30, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	806	Option model	Stock price	$	1.54
				Exercise price	$	1.68
				Term (in years)	4.4
				Volatility	95.19		%
				Dividend rate	—
				Risk-free return	0.64		%
Fair value of derivatives embedded within convertible debt	$	166,629	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.22
				Convertible trading price	117.94		%
				Volatility	18		%
				Implied credit spread	8% - 9% (8.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2012:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2012		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	769	Option model	Stock price	$	1.40
				Exercise price	$	1.68
				Term (in years)	3.8
				Volatility	76.87		%
				Dividend rate	—
				Risk-free return	0.50		%
Fair value of derivatives embedded within convertible debt	$	172,128	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	14.87
				Convertible trading price	109.00		%
				Volatility	18		%
				Implied credit spread	10% - 11% (10.5%)

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Long Term Investments Textuals (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Long Term Investment [Member]	Jun. 30, 2012 Long Term Investment [Member]	Jun. 30, 2013 Long Term Investment [Member]	Jun. 30, 2012 Long Term Investment [Member]	Jun. 30, 2013 Long Term Investment [Member] Limited Partnership [Member]	Jun. 30, 2012 Long Term Investment [Member] Limited Partnership [Member]	Jun. 30, 2013 Long Term Investment [Member] Limited Partnership [Member]	Jun. 30, 2012 Long Term Investment [Member] Limited Partnership [Member]	Jun. 30, 2013 Hedge Funds [Member]	Dec. 31, 2012 Hedge Funds [Member]
Schedule of Equity Method Investments [Line Items]
Equity income (loss) on long-term investments			$ 846	$ (1,215)	$ 823	$ (1,329)	$ 846	$ (1,215)	$ 823	$ (1,329)
Equity Method Investments	$ 6,671	$ 6,432									$ 6,671	$ 6,432

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New Valley LLC

6 Months Ended

Jun. 30, 2013

New Valley LLC [Abstract]

NEW VALLEY LLC

NEW VALLEY LLC

The components of “Investments in non-consolidated real estate businesses” were as follows:

	June 30, 2013		December 31, 2012
Douglas Elliman Realty LLC	$	69,974	$	65,171
Sesto Holdings	5,037		5,037
1107 Broadway	6,579		5,566
Lofts 21	900		900
Hotel Taiwana	6,313		2,658
East 68th Street	7,000		7,000
11 Beach Street	10,508		9,642
Maryland Portfolio	4,206		4,615
701 Seventh Avenue	9,888		9,307
Queens Plaza	7,350		7,350
Chrystie Street	1,992		1,973
Leroy Street	1,150		—
101 Murray Street	11,981		—
Investments in non-consolidated real estate businesses	$	142,878	$	119,219

Residential Brokerage Business. New Valley recorded income of $6,815 and $4,929 for the three months ended June 30, 2013 and 2012, respectively, associated with Douglas Elliman Realty, LLC. New Valley recorded income of $7,438 and $6,373 for the six months ended June 30, 2013 and 2012, respectively, associated with Douglas Elliman Realty, LLC. New Valley received cash distributions from Douglas Elliman Realty, LLC of $1,311 and $564 for the three months ended June 30, 2013 and 2012, respectively. New Valley received cash distributions from Douglas Elliman Realty, LLC of $2,636 and $2,889 for the six months ended June 30, 2013 and 2012, respectively. The summarized financial information of Douglas Elliman Realty, LLC is as follows:

	June 30, 2013		December 31, 2012
Cash	$	89,491	$	78,015
Other current assets	8,665		8,543
Property, plant and equipment, net	15,645		15,796
Trademarks	21,663		21,663
Goodwill	38,539		38,523
Other intangible assets, net	785		897
Other non-current assets	3,420		3,182
Notes payable - current	378		466
Other current liabilities	62,380		22,065
Notes payable - long term	283		334
Other long-term liabilities	9,420		9,614
Members' equity	105,747		134,140

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Revenues	$	113,647		$	97,955	$	188,184		$	169,130
Costs and expenses	100,093			88,568		173,707			157,794
Depreciation expense	985			831		1,958			1,646
Amortization expense	55			61		111			121
Other income	261			490		403			1,232
Interest (income) expense, net	(8		)	9		(8		)	32
Income tax expense	301			269		242			323
Net income	$	12,482		$	8,707	$	12,577		$	10,446

Douglas Elliman Realty is in discussions with Prudential to redeem the approximate 20% equity interest owned by a former affiliate of Prudential.  The redemption price for such equity interest is to be determined through an appraisal process in accordance with the terms of Douglas Elliman Realty's Limited Liability Company Operating Agreement. Upon completion of the redemption, Vector will own more than 50% of Douglas Elliman Realty and will consolidate Douglas Elliman Realty accordingly.

Chelsea Eleven.  New Valley recorded equity income of $451 and $2,118 for the three and six months ended June 30, 2012, respectively, and received net distributions of $8,439 for the six months ended June 30, 2012, related to New Valley Chelsea. New Valley had no exposure to loss as a result of its investment in Chelsea as of June 30, 2013.

Hotel Taiwana. New Valley contributed additional capital of $567 in February 2013 and $3,088 in April 2013, along with contributions of additional capital by the other investment partners of Hill Street Partners LLP ("Hill"). New Valley's investment percentage did not change from year end. Hill used the contributions to purchase the remaining interest in Hotel Taiwana.

101 Murray Street. In May 2013, a subsidiary of New Valley acquired a 25% interest in a joint venture, which had the rights to acquire a 15-story building on a 31,000 square-foot lot in the Tribeca neighborhood of Manhattan, NY. The former owner will vacate the building by July 2014. The joint venture plans to build a 150-unit, luxury condominium building on the building's site. Development will begin in 2014 and is expected to be completed in September 2017.

In July 2013, the joint venture closed on the acquisition of the property. New Valley had invested $11,981 in the joint venture as of June 30, 2013 in the form of capital contributions and a loan bearing interest at 12% per annum, compounded quarterly, to the joint venture partner. New Valley contributed another $7,275 in July 2013 in the form of capital contributions and a loan, bearing interest at 12% per annum, compounded quarterly, to the same joint venture partner.

Park Lane Hotel. In July 2013, a subsidiary of New Valley acquired an 18% interest in a joint venture that has agreed to acquire the Park Lane Hotel, which is presently a 47-story, 605-key independent hotel owned and operated by the Helmsley Family Trust and Estate. The joint venture is developing plans for a hotel and luxury residential condominiums.  The development is estimated to take approximately 30 months from commencement of construction.

Consolidated real estate investments:

The components of “Investments in consolidated real estate businesses, net” were as follows:

	June 30, 2013		December 31, 2012
Escena, net	$	13,139	$	13,295
Indian Creek	10,061		—
Investment in consolidated real estate businesses, net	$	23,200	$	13,295

Investment in Escena. The components of the Company's investment in Escena are as follows:

	June 30, 2013			December 31, 2012
Land and land improvements	$	11,430		$	11,430
Building and building improvements	1,530			1,530
Other	1,403			1,374
	14,363			14,334
Less accumulated depreciation	(1,224		)	(1,039		)
	$	13,139		$	13,295

The Company recorded an operating loss of $307 and $123 for the three months ended June 30, 2013 and 2012, respectively, from Escena. The Company recorded operating income of $76 and $487 for the six months ended June 30, 2013 and 2012, respectively, from Escena.

Investment in Indian Creek. In March 2013, New Valley invested $7,616 for an approximate 80% interest in Timbo LLC ("Indian Creek") which owns a residential real estate conversion project located on Indian Creek, Florida. As a result of the 80% ownership interest, the consolidated financial statements of the Company include the balances of Indian Creek which included land and building of approximately $9,719, a line of credit of $3,570, equity interest of $4,576 and a minority interest of $1,147 as of June 30, 2013. New Valley received a distribution of $3,080 during the six months ended June 30, 2013, while $767 is payable to the minority interest shareholder as of June 30, 2013.

In May 2013, Indian Creek entered into a $8,400 line of credit for a construction loan, that bears interest at the Overnight LIBOR rate plus 250 basis points, floating, per annum. A total of $3,570 was outstanding under the facility and has been classified as a component of Notes payable on the Company's Condensed Consolidated Balance Sheet as of June 30, 2013.

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Long Term Investments

6 Months Ended

Jun. 30, 2013

Long-term Investments [Abstract]

LONG-TERM INVESTMENTS

LONG-TERM INVESTMENTS

Long-term investments accounted for at cost:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	20,540	$	22,648	$	15,540	$	16,962
Real estate partnership	752		1,142		827		1,391
Investments accounted for at cost	$	21,292	$	23,790	$	16,367	$	18,353

Long-term investment partnership accounted for under the equity method:

	June 30, 2013		December 31, 2012
Investment partnership	$	6,671	$	6,432

The Company recorded equity income of $846 and $823 for the three and six months endedJune 30, 2013, respectively, related to the limited partnership. The Company recorded an equity loss of $1,215 and $1,329 for the three and six months endedJune 30, 2012, respectively, related to the limited partnership.

The carrying value of the investment was approximately $6,671 and $6,432 as of June 30, 2013 and December 31, 2012, respectively, which approximated the investment's fair value.

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Condensed Consolidated Statements of Stockholders' Deficiency (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended							6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Common Stock [Member]	Jun. 30, 2013 Additional Paid-in Capital [Member]	Jun. 30, 2013 Accumulated Deficit [Member]	Jun. 30, 2013 Accumulated Other Comprehensive (Loss) Income [Member]	Jun. 30, 2013 Treasury Stock [Member]	Dec. 31, 2012 Treasury Stock [Member]	Jun. 30, 2013 Noncontrolling Interest [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ (79,252)	$ 8,989	$ 0	$ (65,116)	$ (10,268)	$ (12,857)	$ (12,857)	$ 0
Beginning Balance (in shares)		89,898,411
Net income (loss)	11,830			11,830
Change in net loss and prior service cost, net of income taxes	417				417
Forward contract adjustments, net of income taxes	19				19
Unrealized loss on long-term investment securities accounted for under the equity method, net of income taxes	(347)				(347)
Change in net unrealized gain on investment securities, net of income taxes	10,041				10,041
Net unrealized gains reclassified into net income, net of income taxes	(3,094)				(3,094)
Unrealized gain on investment securities, net of income taxes	6,947
Total comprehensive income	7,036
Total comprehensive income	18,866
Distributions and dividends on common stock	(71,518)		(1,250)	(70,268)
Restricted stock grant	0		(5)
Restricted stock grant (in shares)		50,000
Stock-based compensation	1,255		1,255
Contributions to non-controlling interest	1,914							1,914
Distributions to non-controlling interest	(767)							(767)
Ending Balance	$ (129,502)	$ 8,994	$ 0	$ (123,554)	$ (3,232)	$ (12,857)	$ (12,857)	$ 1,147
Ending Balance (in shares)		89,948,411

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New Valley LLC Summarized Financial Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Investment Holdings [Line Items]
Cash	$ 281,713	$ 208,748	$ 281,713	$ 208,748	$ 405,855	$ 240,923
Other current assets	5,220		5,220		5,721
Property, plant and equipment, net	58,067		58,067		57,153
Other non-current assets	49,490		49,490		55,894
Other current liabilities	13,080		13,080		16,891
Other long-term liabilities	2,502		2,502		1,857
Interest (income) expense, net	1,471	583	2,280	515
Income tax expense	10,017	1,233	9,682	(2,259)
Douglas Elliman Realty LLC [Member] | New Valley LLC [Member]
Investment Holdings [Line Items]
Cash	89,491		89,491		78,015
Other current assets	8,665		8,665		8,543
Property, plant and equipment, net	15,645		15,645		15,796
Trademarks	21,663		21,663		21,663
Goodwill	38,539		38,539		38,523
Other intangible assets, net	785		785		897
Other non-current assets	3,420		3,420		3,182
Notes payable - current	378		378		466
Other current liabilities	62,380		62,380		22,065
Notes payable - long term	283		283		334
Other long-term liabilities	9,420		9,420		9,614
Members' equity	105,747		105,747		134,140
Revenues	113,647	97,955	188,184	169,130
Costs and expenses	100,093	88,568	173,707	157,794
Depreciation expense	985	831	1,958	1,646
Amortization expense	55	61	111	121
Interest (income) expense, net	261	490	403	1,232
Interest (income) expense, net	(8)	9	(8)	32
Income tax expense	301	269	242	323
Net income	$ 12,482	$ 8,707	$ 12,577	$ 10,446

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Contingencies (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		1 Months Ended				1 Months Ended	6 Months Ended	50 Months Ended		6 Months Ended			1 Months Ended			6 Months Ended										1 Months Ended																	6 Months Ended			6 Months Ended
	Jun. 30, 2013 Liggett [Member]	Jun. 30, 2012 Liggett [Member]	Feb. 29, 2004 Liggett Vector Brands [Member]	Jun. 30, 2013 Liggett Vector Brands [Member]	Jun. 30, 2013 Health Care Cost Recovery Actions [Member] Liggett [Member] cases	Jun. 30, 2013 Non-Engle Progency Cases [Member] Liggett [Member] cases	Jul. 31, 2000 Engle Progeny Cases [Member]	Jun. 30, 2013 Engle Progeny Cases [Member] Liggett [Member] cases plaintiffs	Mar. 31, 2013 Engle Progeny Cases [Member] Liggett [Member] cases	Jun. 30, 2009 Engle Progeny Cases [Member] Liggett [Member]	Jun. 30, 2013 Federal Cases [Member] Liggett [Member] cases	Jun. 30, 2013 State Cases [Member] Liggett [Member] cases	Jun. 30, 2013 Engle Progency Cases Excluding Lukacs [Member] Liggett [Member] cases	Mar. 31, 2010 Lukacs case [Member] Liggett [Member]	Nov. 30, 2008 Lukacs case [Member] Liggett [Member]	Jun. 30, 2002 Lukacs case [Member] Liggett [Member]	Jun. 30, 2013 Lukacs case [Member] Liggett [Member]	Jun. 30, 2013 Campbell v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Douglas v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Putney v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Clay v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Tullo v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Ward v R J Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Calloway v RJ Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Buchanan v. R.J. Reynolds [Member] Liggett [Member]	Jun. 30, 2013 Cohen v. R.J. Reynolds [Member] Liggett [Member]	May 31, 2003 Engle Case Class Action [Member] Liggett [Member] cases plaintiffs	Jul. 31, 2000 Engle Case Class Action [Member] Liggett [Member]	Apr. 30, 2000 Engle Case Class Action [Member] Liggett [Member] plaintiffs	Jun. 30, 2013 Engle Case Class Action [Member] Liggett [Member] cases	Jun. 30, 2013 Engle Case Class Action [Member] Liggett Only Cases [Member] cases	Jun. 30, 2013 West Virginia State Court Cases [Member] Liggett [Member] cases	Jun. 30, 2013 FLORIDA Liggett [Member] cases	Jun. 30, 2013 NEW YORK Liggett [Member] cases	Jun. 30, 2013 MARYLAND Liggett [Member] cases	Jun. 30, 2013 LOUISIANA Liggett [Member] cases	Jun. 30, 2013 WEST VIRGINIA Liggett [Member] cases	Jun. 30, 2013 MISSOURI Liggett [Member] cases	Jun. 30, 2013 OHIO Liggett [Member] cases	Jun. 30, 2013 Liggett Only Cases [Member] cases	Jun. 30, 2013 Individual Actions [Member] Liggett Only Cases [Member] cases	Jun. 30, 2013 Class Actions [Member] cases	Jun. 30, 2013 Price Fixing [Member] Liggett [Member] cases	Jun. 30, 2013 Parsons v. AC & S Inc. [Member] defendants	Jun. 30, 2013 Tobacco Litigation Personal Injury Cases [Member] cases	Jun. 30, 2013 Tobacco Litigation Personal Injury Cases [Member] Liggett [Member] cases	Jun. 30, 2013 Minimum [Member] Engle Progency Cases Excluding Lukacs [Member] Liggett [Member]	Jun. 30, 2013 Maximum [Member] Engle Progency Cases Excluding Lukacs [Member] Liggett [Member]
Loss Contingencies [Line Items]
Cases pending					1	63		4,300			1,257	3,043																		8	2	100	45	9	2	3	2	1	1	5	3	4	1		750	100
Settlements of litigation								144			1	13	14
Defense Verdicts													5														2
Damages awarded							$ 145,000,000	$ 1,146							$ 24,835	$ 37,500	$ 12,418	$ 156	$ 1,350	$ 3,008	$ 349	$ 225	$ 1	$ 1,947	$ 2,035	$ 205		$ 790,000	$ 12,704																		$ 1	$ 3,008
Cases including punitive damages													2
Punitive damages																					1,000			7,600
Number of State Cases Tried to Verdict									85
Number of Federal Cases Tried to Verdict									13
Cases with adverse verdicts								7
Minimum loss exposure								34,000					0
Maximum loss exposure	36,200			500				85,000					16,371
Number of plaintiffs																													3
Plaintiffs Verdicts								10					9														1
Over turned judgment																											5,831
Number of plaintiffs in cases								5,481
Percent responsible for damages incurred by plaintiff																50.00%
Judgment entered																							487	16,100	5,500
Period between trial and final verdict																5 years
Number of Cases Set for Trial																																								1
Gain (loss) related to litigation settlement														14,361
Claims scheduled for trial								34
Number of Cases Pending Appeal											800
Damages sought																																												1,000
Legal expenses and other litigation costs	3,562	4,030
Bonds	7,577
Number of defendants																																												3
Bond cap										200,000
Term of Bond Agreement			5 years
Letter of credit				100
Agreed additional amount funded				$ 400

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Summary of Significant Accounting Policies Basic Earnings Per Share (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accounting Policies [Abstract]
Net income (loss) attributed to Vector Group Ltd.	$ 13,511	$ 3,895	$ 11,830	$ (3,795)
Income attributed to participating securities	(374)	(79)	(328)	0
Net income (loss) available to common stockholders	$ 13,137	$ 3,816	$ 11,502	$ (3,795)

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Condensed Consolidating Financial Information (Narrative) (Details) (Secured Debt [Member])	Jun. 30, 2013
7.75% Senior Secured Notes Due 2021 [Member]
Condensed Financial Statements, Captions [Line Items]
Interest Rate	7.75%
11% Senior Secured Notes Due 2015 [Member]
Condensed Financial Statements, Captions [Line Items]
Interest Rate	11.00%

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company's significant business segments for the three and six months ended June 30, 2013 and 2012 were Tobacco and Real Estate.  The Tobacco segment consists of the manufacture and sale of cigarettes.  The Real Estate segment includes the Company's investment in Escena, Indian Creek and investments in non-consolidated real estate businesses. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Financial information for the Company's operations before taxes for the three and six months ended June 30, 2013 and 2012 follows:

					Real			Corporate
	Tobacco				Estate			and Other			Total
Three months ended June 30, 2013
Revenues	$	249,120			$	—		$	—		$	249,120
Operating income (loss)	48,294		(1	)	(407		)	(3,647		)	44,240
Equity income from non-consolidated real estate businesses	—				6,804			—			6,804
Depreciation and amortization	2,368				152			117			2,637
Three months ended June 30, 2012
Revenues	$	276,594			$	—		$	—		$	276,594
Operating income (loss)	44,590				(249		)	(3,413		)	40,928
Equity income from non-consolidated real estate businesses	—				5,232			—			5,232
Depreciation and amortization	2,383				88			68			2,539
Six months ended June 30, 2013
Revenues	$	489,522			$	—		$	—		$	489,522
Operating income (loss)	95,454		(2	)	(321		)	(7,797		)	87,336
Equity income from non-consolidated real estate businesses	—				7,285			—			7,285
Depreciation and amortization	4,753				280			200			5,233
Capital expenditures	3,319				429			2,247			5,995
Six months ended June 30, 2012
Revenues	$	534,200			$	—		$	—		$	534,200
Operating income (loss)	82,105				272			(8,003		)	74,374
Equity income from non-consolidated real estate businesses	—				8,095			—			8,095
Depreciation and amortization	4,878				173			259			5,310
Capital expenditures	6,334				99			961			7,394

⁽¹⁾ Operating income includes $1,345 of income from a NPM Settlement.

⁽²⁾ Operating income includes $6,947 of income from NPM Settlements.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company's provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual pre-tax results from ordinary operations. The annual effective income tax rate is reviewed and, if necessary, adjusted on a quarterly basis.

The Company's income tax expense (benefit) consisted of the following:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Income (loss) before provision for income taxes	$	23,528	$	5,128		$	21,512	$	(6,054	)
Income tax expense (benefit) using estimated annual effective income tax rate	9,575		1,904			8,755		(2,247		)
Changes in effective tax rates	321		98			—		—
Out-of-period adjustment related to non-deductible expenses in 2011	—		—			—		757
Impact of discrete items, net	121		(769		)	927		(769		)
Income tax expense (benefit)	$	10,017	$	1,233		$	9,682	$	(2,259	)

The discrete item for the three months ended June 30, 2013 is related to the accrual of an unrecognized tax benefit and the discrete items for the six months ended June 30, 2013 is related to the impact of the Company's loss on the extinguishment of the 11% Senior Secured Notes due to the differences in the Company's marginal tax rate and its anticipated effective annual income tax rate at June 30, 2013 and the accrual of an unrecognized tax benefit. The discrete item for the three and six months ended June 30, 2012 is related to the conversion of the Company's 3.875% Senior Convertible Debentures due 2026. The out-of-period adjustment for the six months ended June 30, 2012 is related to a non-accrual of a non-deductible expense related to permanent difference for income taxes in the fourth quarter of 2011.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Net income for purposes of determining basic and diluted EPS

Net income (loss) for purposes of determining basic and diluted EPS was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss) attributed to Vector Group Ltd.	$	13,511		$	3,895		$	11,830		$	(3,795	)
Income attributed to participating securities	(374		)	(79		)	(328		)	—
Net income (loss) available to common stockholders	$	13,137		$	3,816		$	11,502		$	(3,795	)

Basic and diluted EPS calculation shares

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Weighted-average shares for basic EPS	86,826,428	83,345,002	86,824,463	83,179,283
Plus incremental shares related to stock options and non-vested restricted stock	206,562	203,118	195,925	—
Weighted-average shares for basic and fully diluted EPS	87,032,990	83,548,120	87,020,388	83,179,283

Outstanding shares not included in the computation of diluted EPS

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and six months ended June 30, 2013 and 2012 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Number of stock options	N/A		N/A		N/A		2,299,640
Weighted-average exercise price	N/A		N/A		N/A		$	13.09
Weighted-average shares of non-vested restricted stock	53,500		3,500		53,500		383,587
Weighted-average expense per share	16.36		$	17.12	$	16.36	$	10.86
Weighted-average number of shares issuable upon   conversion of debt	26,962,402		17,854,218		26,962,402		18,017,309
Weighted-average conversion price	$	15.98	$	14.09	$	15.98	$	14.10

Schedule of other income (loss), net

Other income, net consists of:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013		2012
(Loss) gain on warrants	$	(28	)	$	(210	)	$	37	$	(853	)
Interest income	826			499			1,476		1,041
Accretion of interest income of debt discount on notes receivable	588			32			623		63
Gain on long-term investment	142			135			142		135
Other (loss) income	(57		)	127			2		129
Other income, net	$	1,471		$	583		$	2,280	$	515

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Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2013

Condensed Consolidating Financial Information [Abstract]

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to Securities and Exchange Commission Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered”. Each of the subsidiary guarantors are 100% owned, directly or indirectly, by the Company, and all guarantees are joint and several and subject to certain automatic release provisions. Relief from the financial statement requirements under Rule 3-10 is being provided because the Company's guarantee release provisions are considered customary pursuant to Section 2510.5 of the SEC Division of Corporation Finance Financial Reporting Manual. The Company's investments in its consolidated subsidiaries are presented under the equity method of accounting.

The indenture of the 7.75% Senior Secured Notes contains similar guarantees and covenants to those of the 11% Senior Secured Notes, except the indenture has covenants that restrict the payment of dividends by the Company if the Company's consolidated earnings before interest, taxes, depreciation and amortization, as defined in the indenture, for the most recently ended four full quarters is less than $75,000 and the indenture also restricts the incurrence of debt if the Company's Leverage Ratio and its Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively.

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	273,219		$	7,779	$	715	$	—		$	281,713
Investment securities available for sale	83,019			51,122		—		—			134,141
Accounts receivable - trade, net	—			12,257		238		—			12,495
Intercompany receivables	879			—		—		(879		)	—
Inventories	—			96,761		—		—			96,761
Deferred income taxes	28,804			3,213		—		—			32,017
Income taxes receivable, net	44,764			—		—		(28,133		)	16,631
Restricted assets	—			1,241		—		—			1,241
Other current assets	479			4,548		193		—			5,220
Total current assets	431,164			176,921		1,146		(29,012		)	580,219
Property, plant and equipment, net	4,115			53,408		544		—			58,067
Investment in consolidated real estate businesses, net	—			—		23,200		—			23,200
Long-term investments accounted for at cost	20,540			—		752		—			21,292
Long-term investments accounted for under the equity method	6,671			—		—		—			6,671
Investments in non-consolidated real estate businesses	—			—		142,878		—			142,878
Investments in consolidated subsidiaries	265,105			—		—		(265,105		)	—
Restricted assets	1,892			10,365		31		—			12,288
Deferred income taxes	39,627			8,643		5,870		—			54,140
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			13,787		—		—			13,787
Other assets	39,568			9,920		2		—			49,490
Total assets	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	33,752	$	154	$	—		$	33,906
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	782			5,025		113		—			5,920
Intercompany payables	—			493		386		(879		)	—
Accrued promotional expenses	—			17,618		—		—			17,618
Income taxes payable	—			449		34,107		(28,133		)	6,423
Accrued excise and payroll taxes payable, net	—			1,208		—		—			1,208
Litigation accruals and current payments due under the Master Settlement Agreement	—			59,966		—		—			59,966
Deferred income taxes	21,328			10,702		—		—			32,030
Accrued interest	22,398			—		—		—			22,398
Other current liabilities	3,872			7,917		1,291		—			13,080
Total current liabilities	48,380			139,954		36,051		(29,012		)	195,373
Notes payable, long-term debt and other obligations, less current portion	623,215			11,567		3,570		—			638,352
Fair value of derivatives embedded within convertible debt	166,629			—		—		—			166,629
Non-current employee benefits	26,436			19,941		—		—			46,377
Deferred income taxes	72,616			35,306		4,522		—			112,444
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	908			37,504		1,458		—			39,870
Total liabilities	938,184			244,272		45,601		(29,012		)	1,199,045
Commitments and contingencies
Stockholders' deficiency	(129,502		)	136,283		128,822		(265,105		)	(129,502		)
Total liabilities and stockholders' deficiency	$	808,682		$	380,555	$	174,423	$	(294,117	)	$	1,069,543

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2012
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	401,344		$	3,776	$	735	$	—		$	405,855
Investment securities available for sale	35,330			34,654		—		—			69,984
Accounts receivable - trade, net	—			11,183		64		—			11,247
Intercompany receivables	354			—		—		(354		)	—
Inventories	—			100,392		—		—			100,392
Deferred income taxes	33,238			3,371		—		—			36,609
Income taxes receivable, net	33,302			—		—		(26,523		)	6,779
Restricted assets	—			2,469		—		—			2,469
Other current assets	665			4,848		208		—			5,721
Total current assets	504,233			160,693		1,007		(26,877		)	639,056
Property, plant and equipment, net	2,104			54,810		239		—			57,153
Investment in consolidated real estate businesses, net	—			—		13,295		—			13,295
Long-term investments accounted for at cost	15,540			—		827		—			16,367
Long-term investments accounted for under the equity method	6,432			—		—		—			6,432
Investments in non- consolidated real estate businesses	—			—		119,219		—			119,219
Investments in consolidated subsidiaries	210,525			—		—		(210,525		)	—
Restricted assets	1,898			7,863		31		—			9,792
Deferred income taxes	38,077			5,669		5,396		—			49,142
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			12,870		—		—			12,870
Other assets	39,534			16,144		216		—			55,894
Total assets	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	36,617	$	161	$	—		$	36,778
Current portion of employee benefits	—			2,824		—		—			2,824
Accounts payable	661			5,173		265		—			6,099
Intercompany payables	—			64		290		(354		)	—
Accrued promotional expenses	—			18,730		—		—			18,730
Income taxes payable	—			1,445		31,347		(26,523		)	6,269
Accrued excise and payroll taxes payable, net	—			20,419		—		—			20,419
Litigation accruals and current payments due under the Master Settlement Agreement	—			34,440		—		—			34,440
Deferred income taxes	23,304			3,995		—		—			27,299
Accrued interest	25,410			—		—		—			25,410
Other current liabilities	5,545			9,658		1,688		—			16,891
Total current liabilities	54,920			133,365		33,751		(26,877		)	195,159
Notes payable, long-term debt and other obligations, less current portion	572,023			14,860		63		—			586,946
Fair value of derivatives embedded within convertible debt	172,128			—		—		—			172,128
Non-current employee benefits	25,599			20,261		—		—			45,860
Deferred income taxes	71,777			33,793		3,962		—			109,532
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,148			54,506		704		—			56,358
Total liabilities	897,595			256,785		38,480		(26,877		)	1,165,983
Commitments and contingencies
Stockholders' deficiency	(79,252		)	108,775		101,750		(210,525		)	(79,252		)
Total liabilities and stockholders' deficiency	$	818,343		$	365,560	$	140,230	$	(237,402	)	$	1,086,731

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	249,120		$	—		$	—		$	249,120
Expenses:
Cost of goods sold	—			180,430			—			—			180,430
Operating, selling, administrative and general expenses	5,506			18,455			489			—			24,450
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(5,506		)	47,858			(489		)	2,377			44,240
Other income (expenses):
Interest expense	(31,723		)	(360		)	(3		)	—			(32,086		)
Change in fair value of derivatives embedded within convertible debt	2,450			—			—			—			2,450
Equity income from non-consolidated real estate businesses	—			—			6,804			—			6,804
Equity income on long-term investments	846			—			—			—			846
Loss on investment securities available for sale	(197		)	—			—			—			(197		)
Equity income in consolidated subsidiaries	32,277			—			—			(32,277		)	—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	1,245			150			76			—			1,471
Income before provision for income taxes	1,769			47,648			6,388			(32,277		)	23,528
Income tax benefit (expense)	11,742			(19,134		)	(2,625		)	—			(10,017		)
Net income	13,511			28,514			3,763			(32,277		)	13,511
Comprehensive income	$	14,633		$	27,179		$	3,763		$	(30,942	)	$	14,633

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	276,594		$	—		$	—		$	276,594
Expenses:
Cost of goods sold	—			211,752			—			—			211,752
Operating, selling, administrative and general expenses	5,223			18,419			272			—			23,914
Management fee expense	—			2,290			—			(2,290		)	—
Operating (loss) income	(5,223		)	44,133			(272		)	2,290			40,928
Other income (expenses):
Interest expense	(25,497		)	(1,006		)	(6		)	—			(26,509		)
Change in fair value of derivatives embedded within convertible debt	(6,003		)	—			—			—			(6,003		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			5,232			—			5,232
Equity loss on long-term investments	(1,215		)	—			—			—			(1,215		)
Equity income in consolidated subsidiaries	28,924			—			—			(28,924		)	—
Management fee income	2,290			—			—			(2,290		)	—
Other, net	456			(8		)	135			—			583
(Loss) income before provision for income taxes	(14,156		)	43,119			5,089			(28,924		)	5,128
Income tax benefit (expense)	18,051			(16,973		)	(2,311		)	—			(1,233		)
Net income	3,895			26,146			2,778			(28,924		)	3,895
Comprehensive income	$	1,137		$	26,585		$	2,778		$	(29,363	)	$	1,137

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	489,522		$	—		$	—		$	489,522
Expenses:
Cost of goods sold	—			353,386			—			—			353,386
Operating, selling, administrative and general expenses	11,382			36,949			469			—			48,800
Management fee expense	—			4,754			—			(4,754		)	—
Operating (loss) income	(11,382		)	94,433			(469		)	4,754			87,336
Other income (expenses):
Interest expense	(64,683		)	(772		)	(7		)	—			(65,462		)
Change in fair value of derivatives embedded within convertible debt	5,499			—			—			—			5,499
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from non-consolidated real estate businesses	—			—			7,285			—			7,285
Equity income on long-term investments	823			—			—			—			823
(Loss) gain on investment securities available for sale	(197		)	5,406			—			—			5,209
Equity income in consolidated subsidiaries	63,565			—			—			(63,565		)	—
Management fee income	4,754			—			—			(4,754		)	—
Other, net	1,947			205			128			—			2,280
(Loss) income before provision for income taxes	(21,132		)	99,272			6,937			(63,565		)	21,512
Income tax benefit (expense)	32,962			(39,791		)	(2,853		)	—			(9,682		)
Net income	11,830			59,481			4,084			(63,565		)	11,830
Comprehensive income	$	18,866		$	61,624		$	4,084		$	(65,708	)	$	18,866

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	534,200		$	—		$	—		$	534,200
Expenses:
Cost of goods sold	—			411,933			—			—			411,933
Operating, selling, administrative and general expenses	11,484			36,623			(214		)	—			47,893
Management fee expense	—			4,581			—			(4,581		)	—
Operating (loss) income	(11,484		)	81,063			214			4,581			74,374
Other income (expenses):
Interest expense	(50,406		)	(2,342		)	(13		)	—			(52,761		)
Change in fair value of derivatives embedded within convertible debt	(27,060		)	—			—			—			(27,060		)
Acceleration of interest expense related to debt conversion	(7,888		)	—			—			—			(7,888		)
Equity income from non-consolidated real estate businesses	—			—			8,095			—			8,095
Equity loss on long-term investments	(1,329		)	—			—			—			(1,329		)
Equity income in consolidated subsidiaries	53,542			—			—			(53,542		)	—
Management fee income	4,581			—			—			(4,581		)	—
Other, net	361			19			135			—			515
(Loss) income before provision for income taxes	(39,683		)	78,740			8,431			(53,542		)	(6,054		)
Income tax benefit (expense)	35,888			(30,206		)	(3,423		)	—			2,259
Net (loss) income	(3,795		)	48,534			5,008			(53,542		)	(3,795		)
Comprehensive (loss) income	$	(10,896	)	$	48,349		$	5,008		$	(53,357	)	$	(10,896	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	5,204		$	57,823		$	2,187		$	(60,024	)	$	5,190
Cash flows from investing activities:
Sale of investment securities	36,533			6,582			—			—			43,115
Purchase of investment securities	(79,368		)	(11,000		)	—			—			(90,368		)
Proceeds from sale or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(19,048		)	—			(19,048		)
Investments in consolidated real estate businesses	—			—			(7,657		)				(7,657		)
Decrease (increase) in cash surrender value of life insurance policies	79			(382		)	—						(303		)
Decrease (increase) in restricted assets	6			(1,274		)	—						(1,268		)
Investments in subsidiaries	(43,584		)	—			—			43,584			—
Proceeds from sale of fixed assets	—			13			—						13
Capital expenditures	(2,247		)	(3,319		)	(429		)				(5,995		)
Repayments of notes receivable	8,433			—			—			—			8,433
Net cash used in investing activities	(85,148		)	(9,380		)	(27,059		)	43,584			(78,003		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			—			3,080						453,080
Deferred financing costs	(11,663		)	—			—						(11,663		)
Repayments of debt	(415,000		)	(3,763		)	(70		)				(418,833		)
Borrowings under revolver	—			474,493			—						474,493
Repayments on revolver	—			(476,888		)	—						(476,888		)
Capital contributions received	—			12,300			31,284			(43,584		)	—
Intercompany dividends paid	—			(50,582		)	(9,442		)	60,024			—
Dividends and distributions on common stock	(71,518		)	—			—						(71,518		)
Net cash (used in) provided by financing activities	(48,181		)	(44,440		)	24,852			16,440			(51,329		)
Net (decrease) increase in cash and cash equivalents	(128,125		)	4,003			(20		)	—			(124,142		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	273,219		$	7,779		$	715		$	—		$	281,713

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	22,900		$	74,473		$	5,557		$	(45,101	)	$	57,829
Cash flows from investing activities:
Purchase of investment securities	—			(1,148		)	—			—			(1,148		)
Proceeds from sale of or liquidation of long-term investments	—			—			72			—			72
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(9,667		)	—			(9,667		)
Distributions from non-consolidated real estate businesses	—			—			6,221			—			6,221
Increase in cash surrender value of life insurance policies	(425		)	(195		)	—			—			(620		)
Decrease (increase) in restricted assets	268			(321		)	—			—			(53		)
Issuance of notes receivable	(234		)	—			—			—			(234		)
Proceeds from sale of fixed assets	393			11			—			—			404
Investments in subsidiaries	(1,008		)	—			—			1,008			—
Capital expenditures	(961		)	(6,334		)	(99		)	—			(7,394		)
Net cash used in investing activities	(6,967		)	(7,987		)	(3,473		)	1,008			(17,419		)
Cash flows from financing activities:
Proceeds from debt issuance	—			14,018			—			—			14,018
Deferred financing costs	—			(315		)	—			—			(315		)
Repayments of debt	—			(13,428		)	(65		)	—			(13,493		)
Borrowings under revolver	—			525,350			—			—			525,350
Repayments on revolver	—			(532,082		)	—			—			(532,082		)
Capital contributions received	—			950			58			(1,008		)	—
Intercompany dividends paid	—			(43,500		)	(1,601		)	45,101			—
Dividends and distributions on common stock	(66,112		)	—			—			—			(66,112		)
Proceeds from exercise of Vector options	45			—			—			—			45
Tax benefits from exercise of Vector options	4			—			—			—			4
Net cash used in financing activities	(66,063		)	(49,007		)	(1,608		)	44,093			(72,585		)
Net (decrease) increase in cash and cash equivalents	(50,130		)	17,479			476			—			(32,175		)
Cash and cash equivalents, beginning of period	238,262			2,488			173			—			240,923
Cash and cash equivalents, end of period	$	188,132		$	19,967		$	649		$	—		$	208,748

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	VECTOR GROUP LTD
Entity Central Index Key	0000059440
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		89,983,587

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:

The condensed consolidated financial statements of Vector Group Ltd. (the “Company” or “Vector”) include the accounts of VGR Holding LLC (“VGR Holding”), Liggett Group LLC (“Liggett”), Vector Tobacco Inc. (“Vector Tobacco”), Liggett Vector Brands LLC (“Liggett Vector Brands”), New Valley LLC (“New Valley”) and other less significant subsidiaries. All significant intercompany balances and transactions have been eliminated.

Liggett and Vector Tobacco are engaged in the manufacture and sale of cigarettes in the United States. New Valley is engaged in the real estate business and is seeking to acquire additional operating companies and real estate properties.

The accompanying unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and, in management's opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission. The consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.

Reclassifications

Certain reclassifications have been made to the 2012 financial information to conform to the 2013 presentation.

Distributions and Dividends on Common Stock

Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statement of stockholders' equity to the extent of retained earnings and accumulated paid-in capital. Any amounts exceeding retained earnings are recorded as a reduction to additional paid-in capital. Any amounts then exceeding accumulated paid-in capital are recorded as an increase to accumulated deficit.

Earnings Per Share

Earnings Per Share (“EPS”):

Information concerning the Company's common stock has been adjusted to give retroactive effect to the 5% stock dividend paid to Company stockholders on September 28, 2012. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

Net income (loss) for purposes of determining basic and diluted EPS was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss) attributed to Vector Group Ltd.	$	13,511		$	3,895		$	11,830		$	(3,795	)
Income attributed to participating securities	(374		)	(79		)	(328		)	—
Net income (loss) available to common stockholders	$	13,137		$	3,816		$	11,502		$	(3,795	)

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Weighted-average shares for basic EPS	86,826,428	83,345,002	86,824,463	83,179,283
Plus incremental shares related to stock options and non-vested restricted stock	206,562	203,118	195,925	—
Weighted-average shares for basic and fully diluted EPS	87,032,990	83,548,120	87,020,388	83,179,283

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and six months ended June 30, 2013 and 2012 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Number of stock options	N/A		N/A		N/A		2,299,640
Weighted-average exercise price	N/A		N/A		N/A		$	13.09
Weighted-average shares of non-vested restricted stock	53,500		3,500		53,500		383,587
Weighted-average expense per share	16.36		$	17.12	$	16.36	$	10.86
Weighted-average number of shares issuable upon   conversion of debt	26,962,402		17,854,218		26,962,402		18,017,309
Weighted-average conversion price	$	15.98	$	14.09	$	15.98	$	14.10

Fair Value of Derivatives Embedded within Convertible Debt

Fair Value of Derivatives Embedded within Convertible Debt:

The Company has estimated the fair market value of the embedded derivatives based principally on the results of a valuation model. The estimated fair value of the derivatives embedded within the convertible debt is based principally on the present value of future dividend payments expected to be received by the convertible debt holders over the term of the debt. The discount rate applied to the future cash flows is estimated based on a spread in the yield of the Company's debt when compared to risk-free securities with the same duration; thus, a readily determinable fair market value of the embedded derivatives is not available. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads for secured to unsecured debt, unsecured to subordinated debt and subordinated debt to preferred stock to determine the fair value of the derivatives embedded within the convertible debt. The valuation also considers other items, including current and future dividends and the volatility of the Company's stock price.  The range of estimated fair market values of the Company's embedded derivatives was between $163,949 and $169,391.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $166,629 as of June 30, 2013. At December 31, 2012, the range of estimated fair market values of the Company's embedded derivatives was between $169,424 and $174,909.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the inputs at $172,128 as of December 31, 2012.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 5.)

XML

Condensed Consolidating Financial Information Statements of Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 249,120	[1]	$ 276,594	[1]	$ 489,522	[1]	$ 534,200	[1]
Expenses:
Cost of goods sold	180,430	[1]	211,752	[1]	353,386	[1]	411,933	[1]
Operating, selling, administrative and general expenses	24,450		23,914		48,800		47,893
Management fee expense	0		0		0		0
Operating income	44,240		40,928		87,336		74,374
Other income (expenses):
Interest expense	(32,086)		(26,509)		(65,462)		(52,761)
Change in fair value of derivatives embedded within convertible debt	2,450		(6,003)		5,499		(27,060)
Acceleration of interest expense related to debt conversion	0		(7,888)		0		(7,888)
Loss on extinguishment of debt	0		0		(21,458)		0
(Loss) gain on sale of investment securities available for sale	(197)		0		5,209		0
Equity income in consolidated subsidiaries	0		0		0		0
Management fee income	0		0		0		0
Other, net	1,471		583		2,280		515
Income (loss) before provision for income taxes	23,528		5,128		21,512		(6,054)
Income tax benefit (expense)	(10,017)		(1,233)		(9,682)		2,259
Net income (loss)	13,511		3,895		11,830		(3,795)
Comprehensive income	14,633		1,137		18,866		(10,896)
Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	6,804		5,232		7,285		8,095
Equity income (loss) on long-term investments	6,804		5,232		7,285		8,095
Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	846		(1,215)		823		(1,329)
Equity income (loss) on long-term investments	846		(1,215)		823		(1,329)
(Loss) gain on sale of investment securities available for sale	(197)
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0		0		0		0
Expenses:
Cost of goods sold	0		0		0		0
Operating, selling, administrative and general expenses	5,506		5,223		11,382		11,484
Management fee expense	0		0		0		0
Operating income	(5,506)		(5,223)		(11,382)		(11,484)
Other income (expenses):
Interest expense	(31,723)		(25,497)		(64,683)		(50,406)
Change in fair value of derivatives embedded within convertible debt	2,450		(6,003)		5,499		(27,060)
Acceleration of interest expense related to debt conversion			(7,888)				(7,888)
Loss on extinguishment of debt					(21,458)
(Loss) gain on sale of investment securities available for sale					(197)
Equity income in consolidated subsidiaries	32,277		28,924		63,565		53,542
Management fee income	2,377		2,290		4,754		4,581
Other, net	1,245		456		1,947		361
Income (loss) before provision for income taxes	1,769		(14,156)		(21,132)		(39,683)
Income tax benefit (expense)	11,742		18,051		32,962		35,888
Net income (loss)	13,511		3,895		11,830		(3,795)
Comprehensive income	14,633		1,137		18,866		(10,896)
Parent/Issuer [Member] | Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
Parent/Issuer [Member] | Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	846		(1,215)		823		(1,329)
Equity income (loss) on long-term investments	846		(1,215)		823		(1,329)
(Loss) gain on sale of investment securities available for sale	(197)
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	249,120		276,594		489,522		534,200
Expenses:
Cost of goods sold	180,430		211,752		353,386		411,933
Operating, selling, administrative and general expenses	18,455		18,419		36,949		36,623
Management fee expense	2,377		2,290		4,754		4,581
Operating income	47,858		44,133		94,433		81,063
Other income (expenses):
Interest expense	(360)		(1,006)		(772)		(2,342)
Change in fair value of derivatives embedded within convertible debt	0		0		0		0
Acceleration of interest expense related to debt conversion			0				0
Loss on extinguishment of debt					0
(Loss) gain on sale of investment securities available for sale					5,406
Equity income in consolidated subsidiaries	0		0		0		0
Management fee income	0		0		0		0
Other, net	150		(8)		205		19
Income (loss) before provision for income taxes	47,648		43,119		99,272		78,740
Income tax benefit (expense)	(19,134)		(16,973)		(39,791)		(30,206)
Net income (loss)	28,514		26,146		59,481		48,534
Comprehensive income	27,179		26,585		61,624		48,349
Subsidiary Guarantors [Member] | Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
Subsidiary Guarantors [Member] | Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
(Loss) gain on sale of investment securities available for sale	0
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0		0		0		0
Expenses:
Cost of goods sold	0		0		0		0
Operating, selling, administrative and general expenses	489		272		469		(214)
Management fee expense	0		0		0		0
Operating income	(489)		(272)		(469)		214
Other income (expenses):
Interest expense	(3)		(6)		(7)		(13)
Change in fair value of derivatives embedded within convertible debt	0		0		0		0
Acceleration of interest expense related to debt conversion			0				0
Loss on extinguishment of debt					0
(Loss) gain on sale of investment securities available for sale					0
Equity income in consolidated subsidiaries	0		0		0		0
Management fee income	0		0		0		0
Other, net	76		135		128		135
Income (loss) before provision for income taxes	6,388		5,089		6,937		8,431
Income tax benefit (expense)	(2,625)		(2,311)		(2,853)		(3,423)
Net income (loss)	3,763		2,778		4,084		5,008
Comprehensive income	3,763		2,778		4,084		5,008
Subsidiary Non-Guarantors [Member] | Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	6,804		5,232		7,285		8,095
Equity income (loss) on long-term investments	6,804		5,232		7,285		8,095
Subsidiary Non-Guarantors [Member] | Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
(Loss) gain on sale of investment securities available for sale	0
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0		0		0		0
Expenses:
Cost of goods sold	0		0		0		0
Operating, selling, administrative and general expenses	0		0		0		0
Management fee expense	(2,377)		(2,290)		(4,754)		(4,581)
Operating income	2,377		2,290		4,754		4,581
Other income (expenses):
Interest expense	0		0		0		0
Change in fair value of derivatives embedded within convertible debt	0		0		0		0
Acceleration of interest expense related to debt conversion			0				0
Loss on extinguishment of debt					0
(Loss) gain on sale of investment securities available for sale					0
Equity income in consolidated subsidiaries	(32,277)		(28,924)		(63,565)		(53,542)
Management fee income	(2,377)		(2,290)		(4,754)		(4,581)
Other, net	0		0		0		0
Income (loss) before provision for income taxes	(32,277)		(28,924)		(63,565)		(53,542)
Income tax benefit (expense)	0		0		0		0
Net income (loss)	(32,277)		(28,924)		(63,565)		(53,542)
Comprehensive income	(30,942)		(29,363)		(65,708)		(53,357)
Consolidating Adjustments [Member] | Estate [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
Consolidating Adjustments [Member] | Long Term Investment [Member]
Other income (expenses):
Equity income from non-consolidated real estate businesses	0		0		0		0
Equity income (loss) on long-term investments	0		0		0		0
(Loss) gain on sale of investment securities available for sale	$ 0

[1] Revenues and Cost of goods sold include excise taxes of $112,596, $130,967, $221,507 and $252,892, respectively.

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Condensed Consolidating Financial Information Balance Sheets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 281,713	$ 405,855	$ 208,748	$ 240,923
Investment securities available for sale	134,141	69,984
Accounts receivable - trade, net	12,495	11,247
Intercompany receivables	0	0
Inventories	96,761	100,392
Deferred income taxes	32,017	36,609
Income taxes receivable, net	16,631	6,779
Restricted assets	1,241	2,469
Other current assets	5,220	5,721
Total current assets	580,219	639,056
Property, plant and equipment, net	58,067	57,153
Investment in consolidated real estate businesses, net	23,200	13,295
Long-term investments accounted for at cost	21,292	16,367
Long-term investments accounted for under the equity method	6,671	6,432
Investments in non-consolidated real estate businesses	142,878	119,219
Investments in consolidated subsidiaries	0	0
Restricted assets	12,288	9,792
Deferred income taxes	54,140	49,142
Intangible asset	107,511	107,511
Prepaid pension costs	13,787	12,870
Other assets	49,490	55,894
Total assets	1,069,543	1,086,731
Current liabilities:
Current portion of notes payable and long-term debt	33,906	36,778
Current portion of employee benefits	2,824	2,824
Accounts payable	5,920	6,099
Intercompany payables	0	0
Accrued promotional expenses	17,618	18,730
Income taxes payable	6,423	6,269
Accrued excise and payroll taxes payable, net	1,208	20,419
Litigation accruals and current payments due under the Master Settlement Agreement	59,966	34,440
Deferred income taxes	32,030	27,299
Accrued interest	22,398	25,410
Other current liabilities	13,080	16,891
Total current liabilities	195,373	195,159
Notes payable, long-term debt and other obligations, less current portion	638,352	586,946
Fair value of derivatives embedded within convertible debt	166,629	172,128
Non-current employee benefits	46,377	45,860
Deferred income taxes	112,444	109,532
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	39,870	56,358
Total liabilities	1,199,045	1,165,983
Commitments and contingencies
Stockholders' deficiency	(129,502)	(79,252)
Total liabilities and stockholders' deficiency	1,069,543	1,086,731
Parent/Issuer [Member]
Current assets:
Cash and cash equivalents	273,219	401,344	188,132	238,262
Investment securities available for sale	83,019	35,330
Accounts receivable - trade, net	0	0
Intercompany receivables	879	354
Inventories	0	0
Deferred income taxes	28,804	33,238
Income taxes receivable, net	44,764	33,302
Restricted assets	0	0
Other current assets	479	665
Total current assets	431,164	504,233
Property, plant and equipment, net	4,115	2,104
Investment in consolidated real estate businesses, net	0	0
Long-term investments accounted for at cost	20,540	15,540
Long-term investments accounted for under the equity method	6,671	6,432
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated subsidiaries	265,105	210,525
Restricted assets	1,892	1,898
Deferred income taxes	39,627	38,077
Intangible asset	0	0
Prepaid pension costs	0	0
Other assets	39,568	39,534
Total assets	808,682	818,343
Current liabilities:
Current portion of notes payable and long-term debt	0	0
Current portion of employee benefits	0	0
Accounts payable	782	661
Intercompany payables	0	0
Accrued promotional expenses	0	0
Income taxes payable	0	0
Accrued excise and payroll taxes payable, net	0	0
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes	21,328	23,304
Accrued interest	22,398	25,410
Other current liabilities	3,872	5,545
Total current liabilities	48,380	54,920
Notes payable, long-term debt and other obligations, less current portion	623,215	572,023
Fair value of derivatives embedded within convertible debt	166,629	172,128
Non-current employee benefits	26,436	25,599
Deferred income taxes	72,616	71,777
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	908	1,148
Total liabilities	938,184	897,595
Commitments and contingencies
Stockholders' deficiency	(129,502)	(79,252)
Total liabilities and stockholders' deficiency	808,682	818,343
Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	7,779	3,776	19,967	2,488
Investment securities available for sale	51,122	34,654
Accounts receivable - trade, net	12,257	11,183
Intercompany receivables	0	0
Inventories	96,761	100,392
Deferred income taxes	3,213	3,371
Income taxes receivable, net	0	0
Restricted assets	1,241	2,469
Other current assets	4,548	4,848
Total current assets	176,921	160,693
Property, plant and equipment, net	53,408	54,810
Investment in consolidated real estate businesses, net	0	0
Long-term investments accounted for at cost	0	0
Long-term investments accounted for under the equity method	0	0
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated subsidiaries	0	0
Restricted assets	10,365	7,863
Deferred income taxes	8,643	5,669
Intangible asset	107,511	107,511
Prepaid pension costs	13,787	12,870
Other assets	9,920	16,144
Total assets	380,555	365,560
Current liabilities:
Current portion of notes payable and long-term debt	33,752	36,617
Current portion of employee benefits	2,824	2,824
Accounts payable	5,025	5,173
Intercompany payables	493	64
Accrued promotional expenses	17,618	18,730
Income taxes payable	449	1,445
Accrued excise and payroll taxes payable, net	1,208	20,419
Litigation accruals and current payments due under the Master Settlement Agreement	59,966	34,440
Deferred income taxes	10,702	3,995
Accrued interest	0	0
Other current liabilities	7,917	9,658
Total current liabilities	139,954	133,365
Notes payable, long-term debt and other obligations, less current portion	11,567	14,860
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	19,941	20,261
Deferred income taxes	35,306	33,793
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	37,504	54,506
Total liabilities	244,272	256,785
Commitments and contingencies
Stockholders' deficiency	136,283	108,775
Total liabilities and stockholders' deficiency	380,555	365,560
Subsidiary Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	715	735	649	173
Investment securities available for sale	0	0
Accounts receivable - trade, net	238	64
Intercompany receivables	0	0
Inventories	0	0
Deferred income taxes	0	0
Income taxes receivable, net	0	0
Restricted assets	0	0
Other current assets	193	208
Total current assets	1,146	1,007
Property, plant and equipment, net	544	239
Investment in consolidated real estate businesses, net	23,200	13,295
Long-term investments accounted for at cost	752	827
Long-term investments accounted for under the equity method	0	0
Investments in non-consolidated real estate businesses	142,878	119,219
Investments in consolidated subsidiaries	0	0
Restricted assets	31	31
Deferred income taxes	5,870	5,396
Intangible asset	0	0
Prepaid pension costs	0	0
Other assets	2	216
Total assets	174,423	140,230
Current liabilities:
Current portion of notes payable and long-term debt	154	161
Current portion of employee benefits	0	0
Accounts payable	113	265
Intercompany payables	386	290
Accrued promotional expenses	0	0
Income taxes payable	34,107	31,347
Accrued excise and payroll taxes payable, net	0	0
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes	0	0
Accrued interest	0	0
Other current liabilities	1,291	1,688
Total current liabilities	36,051	33,751
Notes payable, long-term debt and other obligations, less current portion	3,570	63
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	0	0
Deferred income taxes	4,522	3,962
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,458	704
Total liabilities	45,601	38,480
Commitments and contingencies
Stockholders' deficiency	128,822	101,750
Total liabilities and stockholders' deficiency	174,423	140,230
Consolidating Adjustments [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Investment securities available for sale	0	0
Accounts receivable - trade, net	0	0
Intercompany receivables	(879)	(354)
Inventories	0	0
Deferred income taxes	0	0
Income taxes receivable, net	(28,133)	(26,523)
Restricted assets	0	0
Other current assets	0	0
Total current assets	(29,012)	(26,877)
Property, plant and equipment, net	0	0
Investment in consolidated real estate businesses, net	0	0
Long-term investments accounted for at cost	0	0
Long-term investments accounted for under the equity method	0	0
Investments in non-consolidated real estate businesses	0	0
Investments in consolidated subsidiaries	(265,105)	(210,525)
Restricted assets	0	0
Deferred income taxes	0	0
Intangible asset	0	0
Prepaid pension costs	0	0
Other assets	0	0
Total assets	(294,117)	(237,402)
Current liabilities:
Current portion of notes payable and long-term debt	0	0
Current portion of employee benefits	0	0
Accounts payable	0	0
Intercompany payables	(879)	(354)
Accrued promotional expenses	0	0
Income taxes payable	(28,133)	(26,523)
Accrued excise and payroll taxes payable, net	0	0
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes	0	0
Accrued interest	0	0
Other current liabilities	0	0
Total current liabilities	(29,012)	(26,877)
Notes payable, long-term debt and other obligations, less current portion	0	0
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	0	0
Deferred income taxes	0	0
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	0	0
Total liabilities	(29,012)	(26,877)
Commitments and contingencies
Stockholders' deficiency	(265,105)	(210,525)
Total liabilities and stockholders' deficiency	$ (294,117)	$ (237,402)