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 September 30, 2014

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)

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 October 31, 2014, Vector Group Ltd. had 109,125,587 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 September 30, 2014 and December 31, 2013	2
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and September 30, 2013	3
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and September 30, 2013	4
Condensed Consolidated Statement of Stockholders' Deficiency for the nine months ended September 30, 2014	5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and September 30, 2013	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3. Quantitative and Qualitative Disclosures About Market Risk	61
Item 4. Controls and Procedures	61
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 6. Exhibits	64
SIGNATURE	65

1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	September 30, 2014			December 31, 2013
ASSETS:
Current assets:
Cash and cash equivalents	$	380,416		$	234,466
Investment securities available for sale	333,883			172,534
Accounts receivable - trade, net	13,607			12,159
Inventories	100,874			93,496
Deferred income taxes	25,540			50,479
Income taxes receivable, net	14,812			—
Restricted assets	2,780			1,785
Other current assets	34,226			23,392
Total current assets	906,138			588,311
Property, plant and equipment, net	86,622			79,258
Real estate held for sale, net	10,643			20,911
Long-term investments accounted for at cost	32,239			20,788
Long-term investments accounted for under the equity method	13,977			8,595
Investments in real estate ventures	154,281			128,202
Restricted assets	12,063			11,981
Deferred income taxes	70,316			51,474
Goodwill, trademarks and other intangible assets, net	268,141			271,111
Prepaid pension costs	28,165			26,080
Other assets	60,798			53,553
Total assets	$	1,643,383		$	1,260,264
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	101,158		$	151,577
Current portion of fair value of derivatives embedded within convertible debt	2,996			19,128
Current payments due under the Master Settlement Agreement	91,590			25,348
Current portion of employee benefits	939			939
Accounts payable	10,845			10,260
Accrued promotional expenses	20,010			18,655
Income taxes payable, net	3,174			6,423
Accrued excise and payroll taxes payable, net	861			11,621
Litigation accruals	3,307			59,310
Deferred income taxes	57,763			45,734
Accrued interest	17,721			21,968
Other current liabilities	34,256			34,147
Total current liabilities	344,620			405,110
Notes payable, long-term debt and other obligations, less current portion	857,107			540,766
Fair value of derivatives embedded within convertible debt	180,474			92,934
Non-current employee benefits	48,608			47,917
Deferred income taxes	165,726			137,650
Payments due under the Master Settlement Agreement	25,809			27,571
Litigation accruals	25,029			27,058
Other liabilities	3,877			2,867
Total liabilities	1,651,250			1,281,873
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, 250,000,000 and 150,000,000 shares authorized, 113,270,834 and 101,430,853 shares issued and 109,125,587 and 97,482,998 shares outstanding	10,912			9,748
Additional paid-in capital	—			—
Accumulated deficit	(126,739		)	(114,787		)
Accumulated other comprehensive income	38,694			22,860
Less: 4,145,247 and 3,947,855 shares of common stock in treasury, at cost	(12,857		)	(12,857		)
Total Vector Group Ltd. stockholders' deficiency	(89,990		)	(95,036		)
Non-controlling interest	82,123			73,427
Total stockholders' deficiency	(7,867		)	(21,609		)
Total liabilities and stockholders' deficiency	$	1,643,383		$	1,260,264

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						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues:
Tobacco*	$	264,520		$	271,516		$	748,468		$	761,038
Real estate	153,748			6,425			415,280			19,298
E-Cigarettes	1,608			—			9,977			—
Total revenues	419,876			277,941			1,173,725			780,336
Expenses:
Cost of sales:
Tobacco*	189,728			194,991			537,667			548,377
Real estate	96,442			5,844			261,531			16,080
E-Cigarettes	1,066			—			6,357			—
Total cost of sales	287,236			200,835			805,555			564,457
Operating, selling, administrative and general expenses	69,431			26,478			200,431			77,915
Litigation settlement and judgment expense	225			87,913			1,725			87,913
Operating income (loss)	62,984			(37,285		)	166,014			50,051
Other income (expenses):
Interest expense	(44,034		)	(33,583		)	(123,670		)	(99,045		)
Loss on extinguishment of debt	—			—			—			(21,458		)
Change in fair value of derivatives embedded within convertible debt	7,127			2,800			7,447			8,299
Acceleration of interest expense related to debt conversion	(994		)	—			(5,112		)	—
Equity income from real estate ventures	3,258			9,489			3,002			16,774
Equity income (loss) on long-term investments	829			(53		)	1,462			770
Gain (loss) on sale of investment securities available for sale	33			(99		)	(38		)	5,110
Other, net	2,466			2,871			8,167			5,151
Income (loss) before provision for income taxes	31,669			(55,860		)	57,272			(34,348		)
Income tax expense (benefit)	11,964			(18,969		)	21,007			(9,287		)
Net income (loss)	19,705			(36,891		)	36,265			(25,061		)
Net income attributed to non-controlling interest	(4,826		)	—			(10,881		)	—
Net income (loss) attributed to Vector Group Ltd.	$	14,879		$	(36,891	)	$	25,384		$	(25,061	)
Per basic common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$	0.14		$	(0.39	)	$	0.24		$	(0.26	)
Per diluted common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$	0.14		$	(0.39	)	$	0.24		$	(0.26	)
Cash distributions and dividends declared per share	$	0.38		$	0.36		$	1.14		$	1.09

* Revenues and cost of sales include excise taxes of $115,323, $121,787, $327,434 and $343,294, 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						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss)	$	19,705		$	(36,891	)	$	36,265		$	(25,061	)
Net unrealized gains on investment securities available for sale:
Change in net unrealized gains	19,184			11,848			22,292			28,752
Net unrealized (losses) gains reclassified into net income	(33		)	99			38			(5,110		)
Net unrealized gains on investment securities available for sale	19,151			11,947			22,330			23,642
Net unrealized (losses) gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	(4,694		)	1,754			3,920			1,170
Net unrealized (losses) gains reclassified into net income	—			—			—			—
Net unrealized (losses) gains on long-term investments accounted for under the equity method	(4,694		)	1,754			3,920			1,170
Net change in forward contracts	16			16			48			47
Net change in pension-related amounts	147			350			442			1,052
Other comprehensive income	14,620			14,067			26,740			25,911
Income tax effect on:
Change in net unrealized gains on investment securities	(7,438		)	(4,810		)	(9,218		)	(11,673		)
Net unrealized (losses) gains reclassified into net income on investment securities	13			(41		)	(16		)	2,074
Change in unrealized (losses) gains on long-term investments	1,933			(712		)	(1,621		)	(475		)
Net unrealized (losses) gains reclassified into net income on long-term investments accounted for under the equity method	—			—			—			—
Forward contracts	(8		)	(7		)	(20		)	(19		)
Pension-related amounts	(105		)	(142		)	(31		)	(427		)
Income tax provision on other comprehensive income	(5,605		)	(5,712		)	(10,906		)	(10,520		)
Other comprehensive income, net of tax	9,015			8,355			15,834			15,391
Comprehensive income (loss)	28,720			(28,536		)	52,099			(9,670		)
Comprehensive income attributed to non-controlling interest	(4,826		)	—			(10,881		)	—
Comprehensive income (loss) attributed to Vector Group Ltd.	$	23,894		$	(28,536	)	$	41,218		$	(9,670	)

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. Stockholders' Deficiency
				Additional						Accumulated Other
	Common Stock			Paid-In			Accumulated			Comprehensive		Treasury			Non-controlling
	Shares	Amount		Capital			Deficit			Income		Stock			Interest			Total
Balance, January 1, 2014	97,482,998	$	9,748	$	—		$	(114,787	)	$	22,860	$	(12,857	)	$	73,427		$	(21,609	)
Net income	—	—		—			25,384			—		—			10,881			36,265
Change in net loss and prior service cost, net of income taxes	—	—		—			—			411		—			—			411
Forward contract adjustments, net of income taxes	—	—		—			—			28		—			—			28
Unrealized gain on long-term investment securities accounted for under the equity method, net of income taxes	—	—		—			—			2,299		—			—			2,299
Change in net unrealized gain on investment securities available for sale, net of income taxes	—	—		—			—			13,074		—			—			13,074
Net unrealized loss on investment securities available for sale reclassified into net income, net of income taxes	—	—		—			—			22		—			—			22
Unrealized gain on investment securities, net of income taxes	—	—		—			—			—		—			—			13,096
Total other comprehensive income	—	—		—			—			—		—			—			15,834
Total comprehensive income	—	—		—			—			—		—			—			52,099
Distributions and dividends on common stock	—	—		(84,524		)	(36,816		)	—		—			—			(121,340		)
Restricted stock grant	1,000,000	100		—			—			—		—			—			100
Effect of stock dividend	5,195,856	520		—			(520		)	—		—			—			—
Note conversions, inclusive of taxes $1,006	5,107,050	510		62,639			—			—		—			—			63,149
Beneficial conversion feature of notes payable, net of income taxes of $10,327	—	—		14,648			—			—		—			—			14,648
Exercise of stock options	339,683	34		4,273			—			—		—			—			4,307
Tax benefit of options exercised	—	—		937			—			—		—			—			937
Stock-based compensation	—	—		2,027			—			—		—			—			2,027
Contributions made by non-controlling interest	—	—		—			—			—		—			2,676			2,676
Distributions to non-controlling interest	—	—		—			—			—		—			(4,861		)	(4,861		)
Balance as of September 30, 2014	109,125,587	$	10,912	$	—		$	(126,739	)	$	38,694	$	(12,857	)	$	82,123		$	(7,867	)

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

	Nine Months Ended			Nine Months Ended
	September 30, 2014			September 30, 2013
Net cash provided by operating activities	$	100,044		$	55,244
Cash flows from investing activities:
Sale of investment securities	174,253			82,649
Purchase of investment securities	(312,919		)	(129,483		)
Proceeds from sale or liquidation of long-term investments	549			75
Purchase of long-term investments	(12,000		)	(5,000		)
Investments in real estate ventures	(29,378		)	(45,977		)
Investments in consolidated real estate businesses	—			(7,697		)
Distributions from real estate ventures	5,540			2,463
Increase in cash surrender value of life insurance policies	(435		)	(470		)
Increase in restricted assets	(1,108		)	(553		)
Issuance of notes receivable	(250		)	—
Proceeds from sale of fixed assets	4			11
Capital expenditures	(20,746		)	(8,686		)
Repayments of notes receivable	933			9,460
Purchase of subsidiaries	(250		)	—
Net cash used in investing activities	(195,807		)	(103,208		)
Cash flows from financing activities:
Proceeds from debt issuance	413,918			454,200
Financing costs	(12,360		)	(11,750		)
Repayments of debt	(10,305		)	(420,710		)
Borrowings under revolver	645,894			723,578
Repayments on revolver	(673,866		)	(736,007		)
Dividends and distributions on common stock	(122,051		)	(107,302		)
Distributions to non-controlling interest	(4,861		)	—
Proceeds from exercise of Vector options	4,407			528
Tax benefit of options exercised	937			33
Net cash provided by (used in) financing activities	241,713			(97,430		)
Net increase (decrease) in cash and cash equivalents	145,950			(145,394		)
Cash and cash equivalents, beginning of period	234,466			405,855
Cash and cash equivalents, end of period	$	380,416		$	260,461

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

6

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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”), Zoom E-Cigs LLC ("Zoom"), New Valley LLC (“New Valley”) and other less significant subsidiaries. New Valley includes the accounts of Douglas Elliman Realty, LLC ("Douglas Elliman") 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. Zoom is engaged in the sale of electronic cigarettes in the United States. New Valley is engaged in the real estate business.

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, 2013 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 2013 financial information to conform to the 2014 presentation.

In connection with the December 13, 2013 acquisition of Douglas Elliman, the Company was required to disclose Douglas Elliman’s revenues and costs separately on the face of its condensed consolidated statements of operation. Consequently, the Company also revised the prior period in order to correctly present the gross revenues and costs of the other consolidated real estate investments as follows:

	Three Months Ended							Nine Months Ended
	September 30, 2013							September 30, 2013
	As Previously Reported		Revision			As Revised		As Previously Reported		Revision			As Revised
Revenues	$	271,516	$	(271,516	)	$	—	$	761,038	$	(761,038	)	$	—
Tobacco revenues	—		271,516			271,516		—		761,038			761,038
Real estate revenues	—		6,425			6,425		—		19,298			19,298
Total revenue	271,516		6,425			277,941		761,038		19,298			780,336
Cost of Sales	194,991		(194,991		)	—		548,377		(548,377		)	—
Tobacco cost of sales	—		194,991			194,991		—		548,377			548,377
Real estate cost of sales	—		5,844			5,844		—		16,080			16,080
Total cost of sales	194,991		5,844			200,835		548,377		16,080			564,457
Operating, selling, administrative and general expenses	$	25,897	$	581		$	26,478	$	74,697	$	3,218		$	77,915

7

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

In addition, the preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013.

During the second quarter of 2014, Douglas Elliman accounts payable as of December 31, 2013, was reduced by $16,434, while current liabilities were increased by $16,434. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

As a result of the amount of operating losses of Zoom as of September 30, 2014 when compared to the remaining components of Corporate and Other segment, the Company has reevaluated its operating segments and has separated Zoom’s operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

(b) Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statement of stockholders' deficiency 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) Revenue Recognition:

Tobacco sales:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales. The Company’s accounting policy is to include federal excise taxes in revenues and cost of goods sold. Since the Company’s significant line of business is tobacco, the Company’s financial position and its results of operations and cash flows have been and could continue to be materially adversely affected by significant unit sales volume declines at the Company and industry levels, regulation, litigation and defense costs, increased tobacco costs or reductions in the selling price of cigarettes in the near term.

Real estate sales: Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, the transaction has been completed and collectibility of the resulting receivable is reasonably assured. Real estate and mortgage commissions earned by the Company’s real estate and mortgage brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commissions and royalties expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

E-Cigarettes:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales.

(d) 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 26, 2014. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

8

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss) attributed to Vector Group Ltd.	$	14,879		$	(36,891	)	$	25,384		$	(25,061	)
Expense attributed to participating securities	(423		)	—			(739		)	—
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$	14,456		$	(36,891	)	$	24,645		$	(25,061	)

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Weighted-average shares for basic EPS	103,213,667	95,775,444	101,395,081	95,741,318
Plus incremental shares related to stock options and non-vested restricted stock	114,623	—	113,070	—
Weighted-average shares for basic and fully diluted EPS	103,328,290	95,775,444	101,508,151	95,741,318

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and nine months ended September 30, 2014 and 2013 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Number of stock options	N/A		524,887		N/A		524,887
Weighted-average exercise price	N/A		$	11.88	N/A		$	11.88
Weighted-average shares of non-vested restricted stock	N/A		55,125		N/A		55,125
Weighted-average expense per share	N/A		$	15.52	N/A		$	15.52
Weighted-average number of shares issuable upon   conversion of debt	32,599,702		29,726,047		31,257,300		29,726,047
Weighted-average conversion price	$	18.36	$	14.50	$	17.30	$	14.50

9

VECTOR GROUP LTD.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(e) 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.  At September 30, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $181,403 and $185,583.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $183,470 as of September 30, 2014. At December 31, 2013, the range of estimated fair market values of the Company's embedded derivatives was between $110,758 and $113,392.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $112,062 as of December 31, 2013.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

(f) Other Income, Net:

Other income, net consists of:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014			2013		2014			2013
Gain on warrants	$	991		$	135	$	868		$	172
Interest income	1,476			2,647		3,665			4,123
Accretion of interest income from debt discount on notes receivable	11			81		87			704
Out-of-period adjustment	—			—		1,231			—
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—		2,335			—
Gain on long-term investment	—			—		—			142
Other (expense) income	(12		)	8		(19		)	10
Other income, net	$	2,466		$	2,871	$	8,167		$	5,151

The out-of-period adjustment, recording for the period ending March 31, 2014, related to a non-accrual of a receivable from Douglas Elliman in the fourth quarter of 2013 and would have increased the Company’s gain on acquisition of Douglas Elliman in 2013. The Company assessed the materiality of this error on all previously issued financial statements and concluded that the error was immaterial to all previously issued financial statements. The impact of correcting this error in the current year is not expected to be material to the Company’s 2014 consolidated financial statements.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(g) Goodwill, Trademarks and Other Intangible Assets:

The components of "Goodwill, trademarks and other intangible assets, net" were as follows:

	September 30, 2014		December 31, 2013
Intangible assets, net	$	7,649	$	11,919
Goodwill	72,976		71,681
Trademarks	80,005		80,000
Intangible asset associated with benefit under the Master Settlement Agreement	107,511		107,511
	$	268,141	$	271,111

The preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013.

(h) Restricted Stock Grant

On July 23, 2014, the Company granted its President and Chief Executive Officer an award of 1,050,000 shares of its Common Stock subject to service and performance-based vesting. The Award Shares will be issued pursuant to the terms of an agreement that provides that both a performance requirement and a continued employment requirement must be met over a seven-year performance period to earn vested rights with respect to the Award Shares. The maximum potential amount of the Award Shares reflects recognition of the CEO's contributions as CEO since January 1, 2006 and the value of his management and real estate expertise to the Company.

(i) New Accounting Pronouncements:

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)-Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance to United States Generally Accepted Accounting Principles ("U.S. GAAP") about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 (1) defines the term substantial doubt, (2) requires an evaluation of every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plan, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. This ASU is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is the result of a convergence project between the FASB and the International Accounting Standards Board. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. The guidance in the ASU supersedes existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2016 with early application not permitted. The ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where the ASU is applied as a cumulative

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

In April 2014, the Financial Accounting Standards Board issued final guidance to change the criteria for reporting discontinued operations while enhancing disclosures in this area (ASU No. 2014-08). Under the new guidance, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as discontinued operations. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The guidance is effective for annual financial statements with fiscal years beginning on or after December 15, 2014 with early adoption permitted for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. The Company will adopt the guidance effective January 1, 2015 and the guidance is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In March 2014, the Emerging Issues Task Force (the “Task Force”) reached a final consensus to amend the accounting guidance for stock compensation tied to performance targets (Issue No. 13-D). The objective of this guidance is to clarify the accounting treatment of certain types of performance conditions in stock-based compensation awards, more specifically, when performance targets can be achieved after the requisite service period. The Task Force concluded that performance criteria subsequent to a service period vesting requirement should be treated as vesting conditions, and as a result, this type of performance condition may delay expense recognition until achievement of the performance target is probable. Issue No. 13-D will be effective for all entities for reporting periods (including interim periods) beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

2. INVENTORIES

Inventories consist of:

	September 30, 2014			December 31, 2013
Leaf tobacco	$	55,769		$	49,140
Other raw materials	3,402			3,161
Work-in-process	606			353
Finished goods	63,628			67,201
E-Cigarettes	7,963			839
Inventories at current cost	131,368			120,694
LIFO adjustments	(30,494		)	(27,198		)
	$	100,874		$	93,496

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 September 30, 2014, Liggett had tobacco purchase commitments of approximately $11,948 and E-Cigarettes purchase commitments of $389. The Company has a single source supply agreement for fire safe cigarette paper through 2015.

All of the Company's inventories at September 30, 2014 and December 31, 2013 have been reported under the LIFO method.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at September 30, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	56,098	$	88,913	$	(1,047	)	$	143,964
Mutual funds invested in fixed income securities	60,637		—		(586		)	60,051
Marketable debt securities	129,432		1,616		(1,180		)	129,868
Total investment securities available for sale	$	246,167	$	90,529	$	(2,813	)	$	333,883

The components of investment securities available for sale at December 31, 2013 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	53,586	$	65,851	$	(963	)	$	118,474
Marketable debt securities	53,063		1,497		(500		)	54,060
Total investment securities available for sale	$	106,649	$	67,348	$	(1,463	)	$	172,534

The table below summarizes the maturity dates of marketable debt securities at September 30, 2014.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	44,220	$	—	$	44,220	$	—
Corporate securities	50,913		3,480		40,031		7,402
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		2,261		13,300		—
U.S. asset backed securities	14,671		3,980		10,691		—
Government agencies	2,900		731		2,169		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total marketable debt securities by maturity dates	$	129,868	$	10,452	$	112,014	$	7,402

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

4. LONG-TERM INVESTMENTS

Long-term investments accounted for at cost:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	31,541	$	36,735	$	20,041	$	24,095
Real estate partnership	698		1,102		747		1,067
Investments accounted for at cost	$	32,239	$	37,837	$	20,788	$	25,162

The Company contributed an additional $12,000 to Investment Partnerships during the nine months ended September 30, 2014.

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

	September 30, 2014		December 31, 2013
Investment partnership	$	13,977	$	8,595

The Company recorded equity income of $829 and an equity loss of $53 for the three months ended September 30, 2014 and 2013, respectively, related to the limited partnership. The Company recorded equity income of $1,462 and $770 for the nine months ended September 30, 2014 and 2013, respectively, related to the limited partnership.

The carrying value of the investment was approximately $13,977 and $8,595 as of September 30, 2014 and December 31, 2013, respectively, which approximated the investment's fair value.

5. NEW VALLEY LLC

Residential Brokerage Business Acquisition. New Valley is engaged in the real estate business and is seeking to acquire additional real estate properties and operating companies.As of January 1, 2013, the Company owned a 50% interest in Douglas Elliman, and the Company accounted for its 50% using the equity method of accounting. On December 13, 2013, an affiliate of New Valley acquired an additional 20.59% interest in Douglas Elliman from Prudential Real Estate Financial Services of America, Inc. for a purchase price of $60,000 in cash. The acquisition increased the Company's ownership position in Douglas Elliman from 50% to 70.59% and resulted in the Company having control.

The transaction was accounted for as an acquisition of a business in the fourth quarter of 2013. The preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013 and September 30, 2014.

Equity Method of Accounting. Prior to December 13, 2013, New Valley accounted for its 50% interest in Douglas Elliman under the equity method of accounting. New Valley recorded income associated with Douglas Elliman of $9,075 and $16,513 for the three and nine months ended September 30, 2013, respectively, which included management fees earned by New Valley from Douglas Elliman.

Summarized income statement information for Douglas Elliman for the three and nine months ended September 30, 2013, is presented below.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Revenues	$	127,537		$	315,721
Costs and expenses	109,178			282,885
Depreciation expense	986			2,944
Amortization expense	56			167
Other income	(109		)	(512		)
Interest income, net	(14		)	(22		)
Income tax expense	442			684
Net income	$	16,998		$	29,575

New Valley received cash distributions from Douglas Elliman of $2,961 for the nine months ended September 30, 2013.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Investments in real estate ventures.  New Valley also holds equity investments in various real estate projects domestically and internationally. The components of “Investments in real estate ventures” were as follows:

	September 30, 2014		December 31, 2013
Milanosesto Holdings (f/k/a Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (f/k/a 1107 Broadway)	6,384		6,579
The Whitman	526		1,165
The Marquand	12,000		7,000
11 Beach Street	12,328		11,160
20 Times Square (f/k/a 701 Seventh Avenue)	12,481		11,148
101 Murray Street	25,269		19,256
160 Leroy Street	1,353		1,150
PUBLIC Chrystie House (f/k/a Chrystie Street)	3,180		2,048
25-19 43rd Avenue	733		—
Queens Plaza (f/k/a 23-10 Queens Plaza South)	12,590		8,058
8701 Collins Avenue	4,634		3,794
125 Greenwich Street	9,308		—
Condominium and Mixed Use Development	100,786		71,358
Maryland Portfolio	3,348		3,498
ST Portfolio	15,508		15,984
Apartment Buildings	18,856		19,482
Park Lane Hotel	18,097		19,514
Hotel Taiwana	6,850		7,428
Coral Beach and Tennis Club	2,708		2,964
Hotels	27,655		29,906
Other	1,947		2,419
Investments in real estate ventures	$	154,281	$	128,202

Condominium and Mixed Use Development:

Condominium and mixed use developments investments range in ownership percentage from 5% to 49.5%. New Valley recorded equity income of $5,090 and $7,389 during the three and nine months ended September 30, 2014, respectively. The Company recorded $5,000 of income from real estate ventures for the three and nine months ended September 30, 2014 in connection with its proportionate share of the Marquand’s income from the sale of approximately 40% of its units during the quarter. In addition, during the nine months ended September 30, 2014, the Company recorded $2,254 of income in connection with its proportionate share of the sale of a commercial unit at 10 Madison Square Park West (f/k/a 1107 Broadway). New Valley recorded equity income of $526 and $656 for the three and nine months ended September 30, 2013. During the nine months ended September 30, 2014, New Valley made capital contributions totaling $27,154, primarily related to 101 Murray Street, 23-10

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Queens Plaza South and a new investment, 125 Greenwich Street. New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's investment percentage did not change. During the nine months ended September 30, 2014, New Valley and received distributions of $7,791. During the nine months ended September 30, 2013, New Valley made capital contributions totaling $23,984 primarily related to its investment in 101 Murray Street, and received distributions of $2,593. New Valley's maximum exposure to loss as a result of its investments in condominium and mixed use developments was $100,786 at September 30, 2014.

Apartment Buildings:

Apartment buildings investments range in ownership percentage from 7.5% to 16.4%. New Valley recorded net equity losses of $87 and $111 for the three months ended September 30, 2014 and 2013, respectively, related to the apartment portfolios. New Valley recorded equity losses of $251 and $394 for nine months ended September 30, 2014 and 2013, respectively, primarily related to an apartment portfolio. New Valley received distributions of $375 and $250 during the nine months ended September 30, 2014 and 2013, respectively, related to an apartment portfolio. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $18,856 at September 30, 2014.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. During the three and nine months ended September 30, 2014, New Valley recorded net equity losses of $2,053 and $4,224. New Valley made capital contributions totaling $1,973 for the nine months ended September 30, 2014, primarily related to Park Lane Hotel. New Valley made capital contributions totaling $21,992 for the nine months ended September 30, 2013, primarily related to the initial investment in Park Lane Hotel. New Valley's maximum exposure to loss as a result of its investments in hotels was $27,655 at September 30, 2014.

Other:

Other investments in real estate ventures relate to an investment in a mortgage company and an insurance company partially owned by Douglas Elliman.

Real Estate Held for Sale:

The components of “Real estate held for sale, net” were as follows:

	September 30, 2014		December 31, 2013
Escena, net	$	10,643	$	10,625
Indian Creek	—		10,286
Real estate held for sale, net	$	10,643	$	20,911

Escena.  In October 2013, the Company sold 200 of the 867 residential lots. The remaining project consists of 667 residential lots, consisting of both single family and multi-family lots, an 18-hole golf course, clubhouse restaurant and golf shop, and a seven-acre site approved for a 450-room hotel.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The assets of "Escena, net" are as follows:

	September 30, 2014			December 31, 2013
Land and land improvements	$	8,930		$	8,930
Building and building improvements	1,832			1,530
Other	1,577			1,577
	12,339			12,037
Less accumulated depreciation	(1,696		)	(1,412		)
	$	10,643		$	10,625

The Company recorded an operating loss of $804 and $845 for the three months ended September 30, 2014 and 2013, respectively, from Escena. The Company recorded an operating loss of $571 and $769 for the nine months ended September 30, 2014 and 2013, respectively, from Escena.

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

In May 2014, the Indian Creek property was sold for $14,400 and New Valley received a distribution of approximately $7,100. New Valley recognized income of approximately $2,400 from the sale for the nine months ended September 30, 2014.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

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

	September 30, 2014			December 31, 2013
Vector:
7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	$	609,577		$	450,000
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311*	23,267			30,689
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944*	64,902			81,586
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817*	80,658			74,183
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0*	157,083			—
Liggett:
Revolving credit facility	2,452			30,424
Term loan under credit facility	3,663			3,884
Equipment loans	16,128			17,252
Other	535			4,325
Total notes payable, long-term debt and other obligations	958,265			692,343
Less:
Current maturities	(101,158		)	(151,577		)
Amount due after one year	$	857,107		$	540,766

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($885 at September 30, 2014 and $6,607 at December 31, 2013, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($2,110 at September 30, 2014 and $12,521 at December 31, 2013, respectively), the 5.50% Variable Interest Senior Convertible Debentures ($86,228 at September 30, 2014 and $0 at December 31, 2013, respectively), and the 7.50% Variable Interest Senior Convertible Notes ($94,247 at September 30, 2014 and $92,934 at December 31, 2013, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

7.75% Senior Secured Notes due 2021 - Vector:

On April 15, 2014, the Company completed the sale of $150,000 principal amount of its 7.75% Senior Secured Notes due 2021 for a price of 106.750% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. The Company received net proceeds of approximately $158,700 after deducting underwriting discounts, commissions, fees and offering expenses. The Company will amortize the deferred costs and debt premium related to the additional Senior Secured Notes over the estimated life of the debt.

In August 2014, the Company completed an offer to exchange the 7.75% senior secured notes issued in April 2014 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.

6.75% Variable Interest Senior Convertible Note due 2014 - Vector:

On March 14, 2014, the holder of the 6.75% Variable Interest Senior Convertible Note due 2014 converted $25,000 principal balance of the $50,000 Note into 2,121,479 of the Company's common shares. The Company recorded non-cash accelerated interest expense related to the converted debt of $3,679 for the nine months ended September 30, 2014. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $25,000. The outstanding principal balance due November 15, 2014 is $25,000.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

6.75% Variable Interest Senior Convertible Exchange Notes due 2014 - Vector:

On May 20, 2014, a holder of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $7,500 principal balance of the $107,530 Notes into 560,987 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $7,500.

In August, 2014, holders of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $32,415 principal balance of the $107,530 Notes into 2,424,584 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $32,415. The outstanding principal balance due November 15, 2014 is $67,615.

The Company recorded non-cash accelerated interest expense related to the converted debt of $994 and $1,433 for the three and nine months ended September 30, 2014.

5.5% Variable Interest Senior Convertible Notes due 2020 - Vector:

On March 24, 2014, the Company completed the sale of $258,750 of its 5.5% Variable Interest Convertible Senior Notes due 2020 (the "2020 Convertible Notes"). The 2020 Convertible Notes are the Company's senior unsecured obligations and are effectively subordinated to any of its secured indebtedness to the extent of the assets securing such indebtedness. The 2020 Convertible Notes are also structurally subordinated to all liabilities and commitments of the Company's subsidiaries.

The aggregate net proceeds from the sale of the 2020 Convertible Notes were approximately $250,300 after deducting underwriting discounts, commissions, fees and offering expenses. The net proceeds will be used for general corporate purposes, including for additional investments in real estate and in the Company's tobacco business. The Company may also consider using a portion of the net proceeds from the sale of the notes to address upcoming debt maturities.

The 2020 Convertible Notes pay interest (“Total Interest”) on a quarterly basis beginning April 15, 2014 at a rate of 1.75% per annum plus additional interest, which is based on the amount of cash dividends paid during the prior three-month period ending on the record date for such interest payment multiplied by the total number of shares of its common stock into which the debt will be convertible on such record date. Notwithstanding the foregoing, however, the interest payable on each interest payment date after April 15, 2014 shall be the higher of (i) the Total Interest and (ii) 5.5% per annum with the interest payment on April 15, 2014 being based on 5.5% per annum. The notes are convertible into the Company’s common stock at the holder’s option. The conversion price at September 30, 2014 was $25.87 per share (approximately 38.6563 shares of common stock per $1,000 principal amount of the note), and is subject to adjustment for various events, including the issuance of stock dividends. The notes will mature on April 15, 2020. If a fundamental change (as defined in the indenture) occurs, the Company will be required to offer to repurchase the notes at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Revolving Credit Facility and Term Loan Under Credit Facility - Liggett:

As of September 30, 2014, a total of $6,115 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the facility was approximately $43,885 based on eligible collateral at September 30, 2014.

Shares of Common Stock per$1,000Principal Amount due on Convertible Notes:

The conversion rates for all convertible debt outstanding as of September 30, 2014 are summarized below:

	September 30, 2014
	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	11.22	89.1021
6.75% Variable Interest Senior Convertible Exchange Notes due 2014	$	12.73	78.5381
7.5% Variable Interest Senior Convertible Notes due 2019	$	16.78	59.5946
5.5% Variable Interest Senior Convertible Debentures due 2020	$	25.87	38.6563

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Amortization of debt discount	$	14,277	$	9,620	$	41,180	$	25,432
Amortization of deferred finance costs	1,147		549		2,910		1,593
Loss on extinguishment of 11% Senior Secured Notes	—		—		—		3,638
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Note converted	—		—		3,679		—
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Exchange Notes converted	994		—		1,433		—
	$	16,418	$	10,169	$	49,202	$	30,663

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	958,265	$	1,445,085	$	692,343	$	1,006,562

Notes payable and long-term debt are carried on the condensed consolidated 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 consolidated 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 the Company's Form 10-K. 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.

7. 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. 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 that 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”). With the commencement of new cases, the defense costs and the risks relating to the unpredictability of litigation increase. The future financial impact of the risks and expenses of litigation are not quantifiable. For the nine months ended September 30, 2014 and 2013, Liggett incurred tobacco product liability legal expenses and other litigation costs totaling $7,282 and $7,334, respectively. The 2013 costs exclude a charge of $86,213 associated with the Engle progeny settlement discussed below.

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Unaudited

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending 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 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 $5,093 in bonds as of September 30, 2014.

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. In several cases, plaintiffs 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. 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 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 7: (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 reasonably 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. A number of the judgments have been affirmed on appeal and satisfied by the defendants. As of October 27, 2014, 19Engle progeny cases where Liggett was a defendant at trial resulted in verdicts. Thirteen verdicts were returned in favor of the plaintiffs and six in favor of Liggett. Excluding the Lukacs case, which was tried in 2002, seven years before the trials of Engle progeny cases commenced, the compensatory verdicts against Liggett have ranged from $1 to $3,600. In certain cases, the judgments entered have been joint and several with other defendants. In three of the cases, punitive damages were awarded against Liggett. Except as discussed in this Note 7 regarding the cases where an adverse verdict was entered against Liggett and that remain 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.

Although Liggett has generally been successful in managing litigation, litigation is subject to uncertainty and significant challenges remain, including with respect to the remaining 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. 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 any of the remaining 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, including the remaining Engle progeny cases. As of September 30, 2014, Liggett (and in certain cases the Company) had, on an individual basis, settled 144Engle progeny cases for approximately $1,170 in the aggregate. There were no settlements in the third quarter of 2014. In addition, in October 2013, Liggett announced a settlement of the claims of over 4,900Engle progeny plaintiffs (see Engle Progeny Settlement below).

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Unaudited

Individual Actions

As of September 30, 2014, there were 48 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 September 30, 2014:

State	Number of Cases
Florida	30
New York	8
Maryland	4
Louisiana	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, 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

Engle Case. 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.

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Unaudited

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 a result, Liggett and the Company, and other cigarette manufacturers, were named defendants in thousands of Engle progeny cases in both federal and state courts in Florida. Although the Company was not named as a defendant in the Engle case, it was named as a defendant in substantially all of the Engle progeny cases where Liggett was named as a defendant.

Engle Progeny Settlement. On October 23, 2013, the Company entered into a settlement with approximately 4,900Engle progeny plaintiffs and their counsel. Pursuant to the terms of the settlement, Liggett agreed to pay a total of approximately $110,000, with approximately $61,600 paid in a lump sum and the balance to be paid in installments over 14 years. In exchange, the claims of over 4,900 plaintiffs were dismissed with prejudice against the Company and Liggett. In 2013 the Company recorded a charge of $86,213 in connection with the settlement. Of this amount, $25,213 is related to certain payments discounted to their present value because the timing and amounts of such payments are fixed and determinable. The present value of the installment payments was computed using an 11% annual discount rate. The installment payments total approximately $48,000 on an undiscounted basis. The Company’s future payments will be approximately $3,500 per annum through 2028, with a cost of living increase beginning in 2021.

Notwithstanding the comprehensive nature of the Engle Progeny Settlement, approximately 330 plaintiffs' claims remain outstanding. Therefore, the Company and Liggett may still be subject to periodic adverse judgments which could have a material adverse affect on the Company's consolidated financial position, results of operations and cash flows.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

As of October 27, 2014, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages	Liggett Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Liggett satisfied the judgment and the case is concluded.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	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 which was denied. Both sides sought discretionary review from the Florida Supreme Court. The appeal is stayed pending the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	Affirmed by the Fourth District Court of Appeal. Discretionary review from the Florida Supreme Court was denied. Liggett satisfied the judgment and the case is concluded, other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	Liggett satisfied the merits judgment and other than an issue regarding attorneys' fees, the case is concluded.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. 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. Affirmed by the First District Court of Appeal, but, the court certified an issue of conflict with another case. The defendants sought discretionary review by the Florida Supreme Court. The appeal is stayed pending the outcome of Hess.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	$3,479	None	Liggett settled its portion of the judgment for $1,500 and the case is concluded.
August 2014	Irimi v. R.J. Reynolds	Broward	$31	None	The verdict has not been reduced to a judgment. Post trial motions are pending.
October 2014	Lambert v. R.J. Reynolds	Pinellas	$3,600	$9,500	The verdict has not been reduced to a judgment. Post trial motions are pending.
Total Damages Awarded:			$28,804	$18,100
Amounts paid or compromised:			$(17,978)	$(1,000)
Damages remaining on Appeal:			$10,826	$17,100

Through September 30, 2014, Liggett has paid $20,040, including interest and legal fees, to satisfy the judgments in six Engle progeny cases (Lukacs, Campbell, Douglas, Clay,Ward and Rizzuto). The Tullo judgment was satisfied on October 22, 2014. Liggett paid $272, including interest.

The Company's potential range of loss in the Putney, Calloway, Buchanan, Cohen, Irimi and Lambert cases is between $0 and $27,926 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 7, the Company is unable to determine a range of loss related to the remaining Engle progeny cases. Other than $272 accrued for Tullo, no amounts have been expensed or accrued in the accompanying condensed consolidated financial statements for the cases described above. 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.

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

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 has led to other adverse rulings by other state appellate courts.

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 the Rey case, a state court 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' further appellate efforts were unsuccessful.

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. This was the first time the Florida Supreme Court addressed the merits of an Engle progeny case. In October 2013, the United States Supreme Court declined to review the decision and Liggett satisfied the judgment. Recently, the United States Supreme Court declined to review the decisions in several other Engle progeny cases.

In Hess, a case pending in Broward County, the jury returned a verdict finding that decedent relied to his detriment on an omission by the defendant before May 5, 1982 (twelve years prior to the filing of the Engle Complaint).  Defendant moved for judgment as a matter of law on plaintiff’s fraudulent concealment claim on the basis that the claim was barred by Florida’s statute of repose.  The trial court denied the motion and was reversed by the Fourth District Court of Appeal, which held that any fraud committed before May 5, 1982 is barred.  This decision conflicts with decisions from other district courts of appeal and is before the Florida Supreme Court pursuant to its conflict jurisdiction.  Oral argument occurred on April 30, 2014. A decision is pending.

Liggett Only Cases.  There are currently five cases pending where Liggett is the only remaining 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 after it was removed by the court. The motion was granted and Liggett appealed. There has been no recent activity in the other two Individual Actions. Trial in Lambert, an Engle progeny case, concluded on September 30, 2014 and resulted in a jury verdict against Liggett for $13,100. Post trial motions are pending. The other Engle progeny case is not currently set for trial. Cases where Liggett is the only defendant could increase as a result of the remaining Engle progeny cases.

Class Actions

As of September 30, 2014, 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.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 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, allege they were exposed to secondhand smoke from cigarettes that were manufactured by the defendants, including Liggett, and suffered injury as a result of that exposure. The plaintiffs seek to recover an unspecified amount of compensatory and punitive damages. No class certification hearing has been held. In June 2013, plaintiffs’ counsel moved for an indefinite stay of the case.  The defendants did not oppose the stay and it was entered by the court.

In February 1998, in Parsons v. AC & S Inc., 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 due to the December 2000 bankruptcy of three of the defendants.

In February 2000, in Smith v. Philip Morris, a case pending in Kansas, a class was commenced against cigarette manufacturers alleging they 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 2014, the court of appeals affirmed the lower court's decision. On August 18, 2014, plaintiffs submitted a petition for review to the Kansas Supreme Court. A decision is pending.

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. After two mistrials, 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 1969, should have included instructions on how to use them. The issue of damages was reserved for further proceedings that have not yet been scheduled. Final judgment as to liability was issued in October 2013, after which the plaintiffs filed a notice of appeal to the West Virginia Supreme Court of Appeals. The defendants did not appeal the verdict in favor of the plaintiffs on the "failure to instruct" claim which impacted less than 30 plaintiffs. 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 September 30, 2014, there was one remaining 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.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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. In June 2014, the court approved a consent agreement between the defendants and the Department of Justice regarding the "corrective statements" to be issued by the defendants. The implementation of the "corrective statements" is uncertain as the defendants are appealing the specific language of the statements.

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 September 30, 2014, there were 16Engle progeny cases scheduled for trial through September 30, 2015, where Liggett (and in many cases, the Company) is a named defendant. Trial dates are, however, subject to change.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 3.3% of the total cigarettes sold in the United States in 2013. 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, 2013, Liggett pre-paid $95,000 of its 2013 MSA obligation. On April 15, 2014, Liggett and Vector Tobacco paid approximately $16,300 for the balance of their 2013 MSA obligation.

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

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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 - 2013 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 allocation of the NPM Adjustment to the payments made by the manufacturers for the benefit of that Settling State.

For 2003 - 2013, 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 in many cases Vector Tobacco) paid subject to dispute, 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 involving the application of the NPM Adjustment for 2003 and whether it 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.

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. In exchange the OPMs and SPMs agreed to a 20% reduction in amounts recovered for the NPM Adjustment for 2003. 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 for 2003. Substantive hearings commenced in April 2012 and were completed in June 2013.

In December 2012, the Participating Manufacturers entered into a “term sheet” with 20 Settling States setting out terms for settlement of the NPM Adjustment for 2003 - 2012 and addressing the NPM Adjustment with respect to those states for future years. Certain of the non-settling states objected to the settlement. In March 2013, the arbitration panel entered a Stipulated Partial Settlement and Award which, among other things, overruled the objections of the non-settling states and directed the independent auditor to implement certain terms of the term sheet effective with the 2013 MSA payments. In May 2013, two additional states joined the settlement. In June 2014, two additional states joined the settlement.Several non-settling states are attempting to vacate the settlement award by filing state court actions. In Idaho, a trial court denied that state's motion to vacate, and the state noticed an appeal of that denial. In Colorado, a trial court also denied that state’s motion to vacate; Colorado has not filed an appeal, and the time period for appeal has passed. 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-settling states' challenges.

As a result of the settlement, in the first nine months of 2013 Liggett recognized income of $6,947. Finally, Liggett received credits of $1,733 in April 2014 from these settling states related to the 2013 NPM Adjustment. The remaining NPM Adjustment accrual of $25,809 at September 30, 2014 relates to the disputed amounts Liggett withheld from the non-settling states for 2004 - 2010, which may be subject to payment, with interest, if Liggett loses the disputes for those years. Approximately $24,400 currently remains in the disputed payments accounts relating to the 2011, 2012 and 2013 NPM Adjustment dispute with the non-settling states.

In September 2013, the panel issued its decisions with respect to the 15 states that did not enter into the Stipulated Partial Settlement and Award, finding that six states did not diligently enforce their MSA escrow statutes in 2003. As a result of this ruling Liggett recognized income of $5,987 including interest, in the third quarter of 2013. All six of the states that were found to be non-diligent filed motions in state court seeking to vacate or reduce the amount of the arbitration award. A trial court in one of those states, Pennsylvania, rejected the state's motion to vacate the award but granted its motion to reduce the award. As a result, in April 2014, Liggett received a credit in the amount of $6,441 for the 2003 NPM Adjustment (as calculated by the independent auditor). It subsequently reimbursed the six states 20% of that credit, pursuant to the agreement discussed above, bringing its net recovery to $5,152, which is approximately $1,315 lower than the amount Liggett believes it’s entitled to. Subsequent to the April 15, 2014 MSA payment date, a state court in Missouri ruled similarly to the ruling in Pennsylvania. As such, Liggett's 2003 NPM credit adjustment could be reduced by an additional $521. In June 2014, Kentucky and Indiana agreed to settle the dispute. As a result, Liggett recognized income of approximately $1,400 in the second quarter of 2014. The Participating Manufacturers, including Liggett, appealed the Pennsylvania and Missouri decisions. If Liggett is unsuccessful

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in its appeals or if other states are successful with respect to any such motions, the amount of the 2003 NPM Adjustment and any interest or earnings to which Liggett is entitled could be lower than the amounts described above and Liggett would be obligated to pay the difference.

Disputes over the NPM Adjustments for 2004-2013 remain to be arbitrated with the states that have not joined the settlement.

"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 re-calculated 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.

In December 2012, the parties arbitrated the dispute before a panel of three arbitrators. In February 2013, the arbitrators ruled that the limitations provisions of the MSA precluded the independent auditor from recalculating Liggett's grandfathered market share ("GFMS") 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, calculated on a net basis, should be increased by a factor of 1.25%.  Liggett filed a motion seeking correction 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 sought additional relief from the panel declaring that any adjustment ordered by the panel is not limited by the four years limitations set forth in the MSA.

A hearing on the motions was held on September 16, 2014. On October 8, 2014 the panel issued its Corrected Final Award, which eliminated the 1.25% adjustment increase and reaffirmed that Liggett is entitled to have its GFMS calculated on a “gross” basis (1.645%). Instead of the 1.25% adjustment increase the panel determined that the independent auditor shall compute Liggett’s market share for all years after March 30, 2000 on a “net” basis but adjust that computation to approximate “gross” market share by using actual returned product data for each year. Liggett plans to work with the independent auditor to determine the amount owed for years 2001 - 2013. Liggett had previously accrued $8,500 for this matter.

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. 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 reasonably predict the outcome of the litigation pending or threatened against Liggett or the Company. Litigation is subject to many uncertainties. Liggett has been found liable in several Engle progeny cases and in Individual Actions, several of 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

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of a pending smoking-related case could encourage the commencement of additional litigation. Except as discussed in this Note 7, 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 the MSA and tobacco litigation for the nine months ended September 30, 2014 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, 2014	$	25,348		$	59,310		$	84,658		$	27,571		$	27,058		$	54,629
Expenses	83,159			2,041			85,200			—			—			—
NPM Settlement adjustment	—			—			—			(1,419		)	—			(1,419		)
Change in MSA obligations capitalized as inventory	(917		)	—			(917		)	—			—			—
Payments	(16,343		)	(61,822		)	(78,165		)	—			—			—
Reclassification from non-current liabilities	343			3,575			3,918			(343		)	(3,575		)	(3,918		)
Interest on withholding	—			203			203			—			1,546			1,546
Balance as of September 30, 2014	$	91,590		$	3,307		$	94,897		$	25,809		$	25,029		$	50,838

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The activity in the Company's accruals for the MSA and tobacco litigation for the nine months ended September 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	87,770			62,872			150,642			—			25,219			25,219
NPM Settlement adjustment	(5,987		)	—			(5,987		)	(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	675			—			675			—			—			—
Payments	(34,077		)	(1,685		)	(35,762		)	—			—			—
Reclassification from non-current liabilities	3,520			223			3,743			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			321			321			—			150			150
Balance as of September 30, 2013	$	84,871		$	63,201		$	148,072		$	35,630		$	27,008		$	62,638

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.

Liggett Vector Brands entered into an 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. The agreement expires in 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. To secure its potential obligations under the agreement, Liggett Vector Brands posted a $100 letter of credit and agreed to fund up to an additional $400. In the third quarter of 2013, Liggett paid $83 for obligations under this program, and therefore, is only committed to fund an additional $317 over the letter of credit. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at September 30, 2014.

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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8. 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 consisted of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014		2013
Income (loss) before provision for income taxes	$	31,669		$	(55,860	)	$	57,272	$	(34,348	)
Income tax expense using estimated annual effective income tax rate	9,932			(22,763		)	17,962		(13,997		)
Changes in effective tax rates	(374		)	1,181			—		1,159
Increase in unrecognized tax benefits	—			251			—		373
Impact of discrete items, net	1,305			—			1,944		816
Impact of discrete item associated with litigation settlement	—			2,362			—		2,362
Inclusion of tax liabilities from unincorporated entities	1,101			—			1,101		—
Income tax expense (benefit)	$	11,964		$	(18,969	)	$	21,007	$	(9,287	)

In the first quarter of 2014, the Company properly determined an adjustment for $1,944 related to its marginal tax rate was required as a result of its acquisition of 20.59% of Douglas Elliman Realty, LLC. This amount was originally recorded as additional income tax expense of $639, a reduction of Additional Paid-In Capital of $865 and a reduction of Other Comprehensive Income of $440. During the three months ended September 30, 2014 the Company reassessed the treatment of the previously recorded reductions to Additional Paid-In-Capital and Accumulated Other Comprehensive Income and reclassified such amounts as an increase to income tax expense.  The Company assessed the materiality of the misclassifications on the financial statements in the prior quarters of 2014 and concluded that it was immaterial to all previously issued quarterly financial statements and the three and nine months ended September 30, 2014.

The discrete item for the nine months ended September 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 September 30, 2013 and the accrual of an unrecognized tax benefit.

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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 September 30, 2014
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	$	220,197	$	220,197	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	5,093		5,093		—		—
Investment securities available for sale							—
Equity securities	143,964		143,403		561		—
Mutual funds invested in fixed income securities	60,051		60,051		—		—
Fixed income securities
U.S. Government securities	44,220		—		44,220		—
Corporate securities	50,913		6,525		44,388		—
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		—		15,561		—
U.S. asset backed securities	14,671		—		14,671		—
U.S. Government agencies	2,900		—		2,900		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total fixed income securities	129,868		6,525		123,343		—
Warrants (1)	2,638		—		—		2,638
Total	$	565,273	$	435,269	$	127,366	$	2,638
Liabilities:
Fair value of derivatives embedded within convertible debt	$	183,470	$	—	$	—	$	183,470

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,638 as of September 30, 2014 and are included in "Other assets". The Company recognized income of $868 for the nine months ended September 30, 2014 related to the change in fair value of the Warrants.

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	Fair Value Measurements as of December 31, 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	$	130,733	$	130,733	$	—	$	—
Certificates of deposit	2,961		—		2,961		—
Bonds	5,337		5,337		—		—
Investment securities available for sale							—
Equity securities	118,474		117,737		737		—
Fixed income securities							—
U.S. Government securities	13,990		—		13,990		—
Corporate securities	29,923		6,497		23,426		—
U.S. mortgage backed securities	495		—		495		—
Commercial mortgage-backed securities	6,822		—		6,822		—
U.S. asset backed securities	2,081		—		2,081		—
Index-linked U.S. bonds	749		—		749		—
Total fixed income securities	54,060		6,497		47,563		—
Warrants (1)	1,935		—		—		1,935
Total	$	313,500	$	260,304	$	51,261	$	1,935
Liabilities:
Fair value of derivatives embedded within convertible debt	$	112,062	$	—	$	—	$	112,062

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $1,758 as of December 31, 2013 and are included in "Other assets". The Company recognized income of $172 for the nine months ended September 30, 2013 related to the change in fair value of the Warrants.

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 5.50% 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 based 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

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Unaudited

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 $7,447 and $8,299 for the nine months ended September 30, 2014 and 2013, respectively, related to the change in fair value of the embedded derivatives.

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 September 30, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,638	Option model	Stock price	$	4.24
				Exercise price	$	1.68
				Term (in years)	2.1
				Volatility	44.76		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	183,470	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.18
				Convertible trading price	111.63		%
				Volatility	16		%
				Implied credit spread	5.0% - 6.0% (5.5%)

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The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	1,935	Option model	Stock price	$	3.13
				Exercise price	$	1.68
				Term (in years)	2.8
				Volatility	53.82		%
				Dividend rate	—
				Risk-free return	0.72		%
Fair value of derivatives embedded within convertible debt	$	112,062	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.37
				Convertible trading price	118.70		%
				Volatility	18		%
				Implied credit spread	7.5% - 8.5% (8.0%)

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 or acquisitions. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of September 30, 2014 and December 31, 2013.

10. SEGMENT INFORMATION

The Company's significant business segments for the three and nine months ended September 30, 2014 and 2013 were Tobacco, E-Cigarettes and Real Estate. The Tobacco segment consists of the manufacture and sale of conventional cigarettes. The E-Cigarettes segment includes the operations of the Company's e-cigarette business. The Real Estate segment includes the Company’s investment in New Valley LLC, which includes Douglas Elliman, Escena, Indian Creek and investments in real estate ventures. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. As a result of the amount of operating losses of Zoom as of September 30, 2014, when compared to the remaining components of the Company's Corporate and Other segment, the Company has reevaluated its operating segments and has separated Zoom’s operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

38

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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 nine months ended September 30, 2014 and 2013 follows:

								Real			Corporate
	Tobacco				E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2014
Revenues	$	264,520			$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993			(1)	(2,910		)	16,222			(3,321		)	62,984
Equity income from real estate ventures	—				—			3,258			—			3,258
Depreciation and amortization	2,853				—			2,740			452			6,045
Three months ended September 30, 2013
Revenues	$	271,516			$	—		$	6,425		$	—		$	277,941
Operating loss	(32,414		)	(2)	(560		)	(806		)	(3,505		)	(37,285		)
Equity income from real estate ventures	—				—			9,489			—			9,489
Depreciation and amortization	2,361				—			160			251			2,772
Nine months ended September 30, 2014
Revenues	$	748,468			$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395			(3)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—				—			3,002			—			3,002
Identifiable assets	445,914				10,657			483,330			703,482			1,643,383
Depreciation and amortization	7,934				—			9,709			956			18,599
Capital expenditures	7,911				—			5,614			7,221			20,746
Nine months ended September 30, 2013
Revenues	$	761,038			$	—		$	19,298		$	—		$	780,336
Operating income (loss)	63,040			(4)	(560		)	(1,423		)	(11,006		)	50,051
Equity income from real estate ventures	—				—			16,774			—			16,774
Identifiable assets	425,186				3,834			208,339			483,596			1,120,955
Depreciation and amortization	7,114				—			440			451			8,005
Capital expenditures	5,813				—			553			2,320			8,686

⁽¹⁾ Operating income includes $225 of litigation judgment expense.

⁽²⁾ Operating income includes $4,016 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

⁽³⁾ Operating income includes $1,419 of income from NPM Settlement and $1,725 of litigation settlement charges and judgment expense.

⁽⁴⁾ Operating income includes $10,963 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

39

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

11. 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. Such release provisions are as follows:

• the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor; and

• the satisfaction of the requirements for legal defeasance or the satisfaction and discharge of the indenture.

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 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.

At September 30, 2014, management believed that the Company was in compliance with all covenants under the indentures of the 7.75% Senior Secured Notes.

40

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2014
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	257,309		$	19,498	$	103,609	$	—		$	380,416
Investment securities available for sale	274,249			59,634		—		—			333,883
Accounts receivable - trade, net	—			11,231		2,376		—			13,607
Intercompany receivables	472			158		—		(630		)	—
Inventories	—			100,874		—		—			100,874
Deferred income taxes	21,497			4,043		—		—			25,540
Income taxes receivable, net	23,429			—		—		(8,617		)	14,812
Restricted assets	—			1,366		1,414		—			2,780
Other current assets	478			12,676		21,072		—			34,226
Total current assets	577,434			209,480		128,471		(9,247		)	906,138
Property, plant and equipment, net	2,896			62,940		20,786		—			86,622
Real estate held for sale, net	—			—		10,643		—			10,643
Long-term investments accounted for at cost	31,541			—		698		—			32,239
Long-term investments accounted for under the equity method	13,977			—		—		—			13,977
Investments in real estate ventures	—			—		154,281		—			154,281
Investments in consolidated subsidiaries	478,744			—		—		(478,744		)	—
Restricted assets	1,707			10,356		—		—			12,063
Deferred income taxes	56,586			8,174		5,556		—			70,316
Goodwill, trademarks and other intangible assets, net	—			107,511		160,630		—			268,141
Prepaid pension costs	—			28,165		—		—			28,165
Other assets	47,873			10,595		2,330		—			60,798
Total assets	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	88,169		$	12,781	$	208	$	—		$	101,158
Current portion of fair value of derivatives embedded within convertible debt	2,996			—		—		—			2,996
Current portion of employee benefits	—			939		—		—			939
Accounts payable	902			4,778		5,165		—			10,845
Intercompany payables	—			—		630		(630		)	—
Accrued promotional expenses	—			20,010		—		—			20,010
Income taxes payable, net	—			11,791		—		(8,617		)	3,174
Accrued excise and payroll taxes payable, net	—			861		—		—			861
Litigation accruals and current payments due under the Master Settlement Agreement	—			94,897		—		—			94,897
Deferred income taxes	44,164			13,599		—		—			57,763
Accrued interest	17,721			—		—		—			17,721
Other current liabilities	5,131			9,232		19,893		—			34,256
Total current liabilities	159,083			168,888		25,896		(9,247		)	344,620
Notes payable, long-term debt and other obligations, less current portion	847,318			9,517		272		—			857,107
Fair value of derivatives embedded within convertible debt	180,474			—		—		—			180,474
Non-current employee benefits	32,562			16,046		—		—			48,608
Deferred income taxes	80,046			39,867		45,813		—			165,726
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,265			51,133		2,317		—			54,715
Total liabilities	1,300,748			285,451		74,298		(9,247		)	1,651,250
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(89,990		)	151,770		326,974		(478,744		)	(89,990		)
Non-controlling interest	—			—		82,123		—			82,123
Total stockholders' (deficiency) equity	(89,990		)	151,770		409,097		(478,744		)	(7,867		)
Total liabilities and stockholders' deficiency	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383

41

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	151,342		$	11,812	$	71,312	$	—		$	234,466
Investment securities available for sale	114,886			57,648		—		—			172,534
Accounts receivable - trade, net	—			10,154		2,005		—			12,159
Intercompany receivables	509			—		—		(509		)	—
Inventories	—			93,496		—		—			93,496
Deferred income taxes	45,578			4,901		—		—			50,479
Income taxes receivable, net	—			10,447		—		(10,447		)	—
Restricted assets	—			1,060		725		—			1,785
Other current assets	513			12,579		10,300		—			23,392
Total current assets	312,828			202,097		84,342		(10,956		)	588,311
Property, plant and equipment, net	3,641			55,093		20,524		—			79,258
Real estate held for sale, net	—			—		20,911		—			20,911
Long-term investments accounted for at cost	20,041			—		747		—			20,788
Long-term investments accounted for under the equity method	8,595			—		—		—			8,595
Investments in real estate ventures	—			—		128,202		—			128,202
Investments in consolidated subsidiaries	410,442			—		—		(410,442		)	—
Restricted assets	1,895			10,086		—		—			11,981
Deferred income taxes	35,000			12,766		3,708		—			51,474
Goodwill, trademarks and other intangible assets, net	—			107,511		163,600		—			271,111
Prepaid pension costs	—			26,080		—		—			26,080
Other assets	38,374			10,126		5,053		—			53,553
Total assets	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	112,275		$	39,013	$	289	$	—		$	151,577
Current portion of fair value of derivatives embedded within convertible debt	19,128			—		—		—			19,128
Current portion of employee benefits	—			939		—		—			939
Accounts payable	1,509			4,136		4,615		—			10,260
Intercompany payables	—			39		470		(509		)	—
Accrued promotional expenses	—			18,655		—		—			18,655
Income taxes payable, net	16,870			—		—		(10,447		)	6,423
Accrued excise and payroll taxes payable, net	—			11,621		—		—			11,621
Litigation accruals and current payments due under the Master Settlement Agreement	—			84,658		—		—			84,658
Deferred income taxes	32,309			13,425		—		—			45,734
Accrued interest	21,968			—		—		—			21,968
Other current liabilities	6,103			10,495		17,549		—			34,147
Total current liabilities	210,162			182,981		22,923		(10,956		)	405,110
Notes payable, long-term debt and other obligations, less current portion	524,182			12,573		4,011		—			540,766
Fair value of derivatives embedded within convertible debt	92,934			—		—		—			92,934
Non-current employee benefits	31,462			16,455		—		—			47,917
Deferred income taxes	65,759			37,602		34,289		—			137,650
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,353			54,924		1,219		—			57,496
Total liabilities	925,852			304,535		62,442		(10,956		)	1,281,873
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(95,036		)	119,224		291,218		(410,442		)	(95,036		)
Non-controlling interest	—			—		73,427		—			73,427
Total stockholders' (deficiency) equity	(95,036		)	119,224		364,645		(410,442		)	(21,609		)
Total liabilities and stockholders' deficiency	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264

42

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 September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	266,328		$	153,748		$	(200	)	$	419,876
Expenses:
Cost of sales	—			190,794			96,442			—			287,236
Operating, selling, administrative and general expenses	6,099			22,395			41,137			(200		)	69,431
Litigation settlement and judgment expense	—			225			—			—			225
Management fee expense	—			2,467			—			(2,467		)	—
Operating (loss) income	(6,099		)	50,447			16,169			2,467			62,984
Other income (expenses):
Interest expense	(43,005		)	(1,026		)	(3		)	—			(44,034		)
Change in fair value of derivatives embedded within convertible debt	7,127			—			—			—			7,127
Acceleration of interest expense related to debt conversion	(994		)	—			—			—			(994		)
Equity income from real estate ventures	—			—			3,258			—			3,258
Equity income on long-term investments	829			—			—			—			829
Gain on sale of investment securities available for sale	33			—			—			—			33
Equity income in consolidated subsidiaries	36,428			—			—			(36,428		)	—
Management fee income	2,467			—			—			(2,467		)	—
Other, net	1,936			296			234			—			2,466
Income (loss) before provision for income taxes	(1,278		)	49,717			19,658			(36,428		)	31,669
Income tax benefit (expense)	16,157			(21,491		)	(6,630		)	—			(11,964		)
Net income	14,879			28,226			13,028			(36,428		)	19,705
Net income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Net income attributed to Vector Group Ltd.	14,879			28,226			8,202			(36,428		)	14,879
Comprehensive income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Comprehensive income attributed to Vector Group	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

43

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 September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	271,516		$	6,425		$	—		$	277,941
Expenses:
Cost of sales	—			194,991			5,844			—			200,835
Operating, selling, administrative and general expenses	4,968			19,990			1,520			—			26,478
Litigation judgment expense	—			87,913			—			—			87,913
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(4,968		)	(33,755		)	(939		)	2,377			(37,285		)
Other income (expenses):
Interest expense	(32,978		)	(602		)	(3		)	—			(33,583		)
Change in fair value of derivatives embedded within convertible debt	2,800			—			—			—			2,800
Equity income from real estate ventures	—			—			9,489			—			9,489
Equity loss on long-term investments	(53		)	—			—			—			(53		)
Loss on sale of investment securities available for sale	(99		)	—			—			—			(99		)
Equity loss in consolidated subsidiaries	(11,514		)	—			—			11,514			—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	603			2,270			(2		)	—			2,871
(Loss) income before provision for income taxes	(43,832		)	(32,087		)	8,545			11,514			(55,860		)
Income tax benefit (expense)	6,941			15,521			(3,493		)	—			18,969
Net (loss) income	(36,891		)	(16,566		)	5,052			11,514			(36,891		)
Comprehensive (loss) income	$	(28,536	)	$	(11,923	)	$	5,052		$	6,871		$	(28,536	)

44

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	758,645		$	415,280		$	(200	)	$	1,173,725
Expenses:
Cost of sales	—			544,024			261,531			—			805,555
Operating, selling, administrative and general expenses	17,315			66,270			117,046			(200		)	200,431
Litigation settlement and judgment expense	—			1,725			—			—			1,725
Management fee expense	—			7,402			—			(7,402		)	—
Operating (loss) income	(17,315		)	139,224			36,703			7,402			166,014
Other income (expenses):
Interest expense	(120,977		)	(3,265		)	(40		)	612			(123,670		)
Change in fair value of derivatives embedded within convertible debt	7,447			—			—			—			7,447
Acceleration of interest expense related to debt conversion	(5,112		)	—			—			—			(5,112		)
Equity income from real estate ventures	—			—			3,002			—			3,002
Equity income on long-term investments	1,462			—			—			—			1,462
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income in consolidated subsidiaries	96,554			—			—			(96,554		)	—
Management fee income	7,402			—			—			(7,402		)	—
Other, net	3,702			780			4,297			(612		)	8,167
(Loss) income before provision for income taxes	(26,875		)	136,739			43,962			(96,554		)	57,272
Income tax benefit (expense)	52,259			(57,846		)	(15,420		)	—			(21,007		)
Net income	25,384			78,893			28,542			(96,554		)	36,265
Net income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Net income attributed to Vector Group Ltd.	25,384			78,893			17,661			(96,554		)	25,384
Comprehensive income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Comprehensive income attributed to Vector Group Ltd.	$	41,218		$	79,026		$	17,661		$	(96,687	)	$	41,218

45

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2013
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	761,038		$	19,298		$	—		$	780,336
Expenses:
Cost of sales	—			548,377			16,080			—			564,457
Operating, selling, administrative and general expenses	16,350			56,939			4,626			—			77,915
Litigation judgment expense	—			87,913									87,913
Management fee expense	—			7,131			—			(7,131		)	—
Operating (loss) income	(16,350		)	60,678			(1,408		)	7,131			50,051
Other income (expenses):
Interest expense	(97,661		)	(1,374		)	(10		)	—			(99,045		)
Change in fair value of derivatives embedded within convertible debt	8,299			—			—			—			8,299
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from real estate ventures	—			—			16,774			—			16,774
(Loss) gain on sale of investment securities available for sale	(296		)	5,406			—			—			5,110
Equity income on long-term investments	770			—			—			—			770
Equity income in consolidated subsidiaries	52,051			—			—			(52,051		)	—
Management fee income	7,131			—			—			(7,131		)	—
Other, net	2,550			2,475			126			—			5,151
(Loss) income before provision for income taxes	(64,964		)	67,185			15,482			(52,051		)	(34,348		)
Income tax benefit (expense)	39,903			(24,270		)	(6,346		)	—			9,287
Net (loss) income	(25,061		)	42,915			9,136			(52,051		)	(25,061		)
Comprehensive (loss) income	$	(9,670	)	$	49,701		$	9,136		$	(58,837	)	$	(9,670	)

46

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	23,189		$	98,319		$	53,475		$	(74,939	)	$	100,044
Cash flows from investing activities:
Sale of investment securities	174,253			—			—			—			174,253
Purchase of investment securities	(310,934		)	(1,985		)	—			—			(312,919		)
Proceeds from sale or liquidation of long-term investments	500			—			49			—			549
Purchase of long-term investments	(12,000		)	—			—			—			(12,000		)
Investments in real estate ventures	—			—			(29,378		)	—			(29,378		)
Purchase of subsidiaries	—			—			(250		)	—			(250		)
Distributions from real estate ventures	—			—			5,540			—			5,540
Increase in cash surrender value of life insurance policies	—			(435		)	—			—			(435		)
Decrease (increase) in restricted assets	188			(607		)	(689		)	—			(1,108		)
Issuance of notes receivable	(35,000		)	—			(250		)	35,000			(250		)
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Proceeds from sale of fixed assets	—			4			—			—			4
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from debt issuance	408,750			40,168			—			(35,000		)	413,918
Financing costs	(12,360		)	—			—			—			(12,360		)
Repayments of debt	—			(41,485		)	(3,820		)	35,000			(10,305		)
Borrowings under revolver	—			645,894			—			—			645,894
Repayments on revolver	—			(673,866		)	—			—			(673,866		)
Capital contributions received	—			10,800			39,034			(49,834		)	—
Intercompany dividends paid	—			(54,000		)	(20,939		)	74,939			—
Dividends and distributions on common stock	(122,051		)	—			—			—			(122,051		)
Distributions to non-controlling interest	—			—			(4,861		)	—			(4,861		)
Proceeds from exercise of Vector options	4,407			—			—			—			4,407
Tax benefit of options exercised	937			—			—			—			937
Net cash provided by (used in) financing activities	279,683			(72,489		)	9,414			25,105			241,713
Net increase in cash and cash equivalents	105,967			7,686			32,297			—			145,950
Cash and cash equivalents, beginning of period	151,342			11,812			71,312			—			234,466
Cash and cash equivalents, end of period	$	257,309		$	19,498		$	103,609		$	—		$	380,416

47

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	44,750		$	127,382		$	1,524		$	(118,412	)	$	55,244
Cash flows from investing activities:
Sale of investment securities	76,067			6,582			—			—			82,649
Purchase of investment securities	(117,982		)	(11,501		)	—			—			(129,483		)
Proceeds from sale of or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(45,977		)	—			(45,977		)
Investments in real estate held for sale	—			—			(7,697		)	—			(7,697		)
Distributions from real estate ventures	—			—			2,463			—			2,463
Increase in cash surrender value of life insurance policies	(20		)	(450		)	—			—			(470		)
Decrease (increase) in restricted assets	5			(558		)	—			—			(553		)
Repayments of notes receivable	9,460			—			—			—			9,460
Proceeds from sale of fixed assets	—			11			—			—			11
Investments in subsidiaries	(72,962		)	—			—			72,962			—
Capital expenditures	(2,320		)	(5,813		)	(553		)	—			(8,686		)
Net cash used in investing activities	(112,752		)	(11,729		)	(51,689		)	72,962			(103,208		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			1,120			3,080			—			454,200
Financing costs	(11,750		)	—			—			—			(11,750		)
Repayments of debt	(415,000		)	(5,604		)	(106		)	—			(420,710		)
Borrowings under revolver	—			723,578			—			—			723,578
Repayments on revolver	—			(736,007		)	—			—			(736,007		)
Capital contributions received	—			13,250			59,712			(72,962		)	—
Intercompany dividends paid	—			(105,882		)	(12,530		)	118,412			—
Dividends and distributions on common stock	(107,302		)	—			—			—			(107,302		)
Proceeds from exercise of Vector options	528			—			—			—			528
Tax benefits from exercise of Vector options	33			—			—			—			33
Net cash (used in) provided by financing activities	(83,491		)	(109,545		)	50,156			45,450			(97,430		)
Net (decrease) increase in cash and cash equivalents	(151,493		)	6,108			(9		)	—			(145,394		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	249,851		$	9,884		$	726		$	—		$	260,461

48

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

(Dollars in Thousands, Except Per Share Amounts)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Vector Group Ltd.’s  financial statements with a narrative from our management's perspective. Our MD&A is divided into the following sections:

•Overview and Recent Developments

•Results of Operations

•Summary of Real Estate Investments

•Liquidity and Capital Resources

Please read this discussion along with our MD&A and audited financial statements as of and for the year ended December 31, 2013 and Notes thereto, included in the our 2013 Annual Report on Form 10-K, and our Consolidated Condensed Financial Statements and related Notes as of and for the quarterly period ended September 30, 2014.

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,

• the sale of electronic cigarettes ("e-cigarettes") in the United States market through our Zoom E-Cigs LLC ("Zoom") subsidiary, 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 70.59% of Douglas Elliman, which operates the largest residential brokerage company in the New York metropolitan area.

On December 13, 2013, an affiliate of New Valley LLC acquired an additional 20.59% interest in Douglas Elliman from Prudential Real Estate Financial Services of America, Inc. The acquisition increased our ownership of Douglas Elliman from 50% to 70.59%. Consequently, after December 13, 2013, we consolidate the operations and financial position of Douglas Elliman.

Zoom entered the United States e-cigarette market in limited retail distribution outlets in 2014. Zoom’s operations are included in our “E-Cigarettes” reporting segment. Our exposure to Zoom, as of September 30, 2014, was approximately $10,700, which was primarily comprised of Zoom's inventory.

Recent Developments

On March 14, 2014, the holder of the 6.75% Variable Interest Senior Convertible Note due 2014 converted $25,000 principal balance of the $50,000 Note into 2,121,479 of our common shares.

On March 24, 2014, we completed the sale of $258,750 of our 5.5% Variable Interest Convertible Senior Notes due 2020 and received net proceeds from the sale of the Notes of approximately $250,300. On April 15, 2014, we completed the sale of $150,000 principal amount of our 7.75% Senior Secured Notes due 2021 for a price of 106.750% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. We received net proceeds of approximately $158,700. The net proceeds of both issuances will be used for general corporate purposes, including for additional investments in real estate and in our tobacco business. In August 2014, we completed an offer to exchange the 7.75% senior secured notes issued in April 2014 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.

49

In May 2014, the Indian Creek property was sold for approximately $14,400 and New Valley received a distribution of approximately $7,100.

In May 2014 and August 2014, holders of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $7,500 and $32,415 principal balance of the $107,530 Notes into 2,985,571 of our common shares.

On July 23, 2014, we granted our President and Chief Executive Officer an award of 1,050,000 shares of our Common Stock subject to performance-based vesting. The Award shares will be issued pursuant to the terms of an agreement that provides that both a performance requirement and a continued employment requirement must be met over a seven-year performance period to earn vested rights with respect to the Award Shares. The maximum potential amount of the Award Shares reflects recognition of the CEO's contributions as CEO since January 1, 2006 and the value of his management and real estate expertise to us. We anticipate expensing the value of the grant of approximately $20,780 over an estimated seven-year period.

Recent Developments in Smoking-Related Litigation

There are no material changes from the Recent Developments in Smoking-Related Litigation 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, 2013, other than in October 2014, in an Engle progeny case, an adverse verdict was entered against Liggett in the amount of $13,100, including $9,500 in punitive damages. The verdict has not been reduced to a judgment. Post trial motions are pending. Please refer to that section and the information below for disclosures regarding the critical accounting policies related to our business.

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, 2013. 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, Zoom, New Valley and other less significant subsidiaries.

For purposes of this discussion and other consolidated financial reporting, our significant business segments for the three and nine months ended September 30, 2014 and 2013 were Tobacco, E-Cigarettes and Real Estate. The Tobacco segment consists of the manufacture and sale of cigarettes. The E-Cigarettes segment includes the operations of Zoom. The Real Estate segment includes our investment in New Valley LLC, which includes Douglas Elliman, Escena, Indian Creek and investments in non-consolidated real estate businesses. As a result of the amount of operating losses of Zoom as of September 30, 2014 when compared to the remaining components of our Corporate and Other segment, we have reevaluated our operating segments and have separated our E-Cigarettes operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation.

50

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2014				2013				2014				2013
Revenues:
Tobacco	$	264,520			$	271,516			$	748,468			$	761,038
E-Cigarettes	1,608				—				9,977				—
Real Estate	153,748				6,425				415,280				19,298
Corporate and Other	—				—				—				—
Total revenues	$	419,876			$	277,941			$	1,173,725			$	780,336
Operating income (loss):
Tobacco	$	52,993		(1)	$	(32,414	)	(2)	$	147,395		(3)	$	63,040		(4)
E-Cigarettes	(2,910		)		(560		)		(7,100		)		(560		)
Real Estate	16,222				(806		)		36,867				(1,423		)
Corporate and Other	(3,321		)		(3,505		)		(11,148		)		(11,006		)
Total operating income (loss)	$	62,984			$	(37,285	)		$	166,014			$	50,051

____________________

⁽¹⁾ Operating income includes $225 of litigation judgment expense.

⁽²⁾ Operating income includes $4,016 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

⁽³⁾ Operating income includes $1,419 of income from NPM Settlement and $1,725 of litigation settlement charges and judgment expense

⁽⁴⁾ Operating income includes $10,963 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

Revenues: Total Revenues were $419,876 for the three months ended September 30, 2014 compared to $277,941 for the three months ended September 30, 2013. Total Revenues increased by $141,935 (51.1%) due to an increase in Real Estate revenues of $147,323 primarily related to the addition of the Douglas Elliman revenues in 2014 and the addition of the Zoom e-cigarette revenues of $1,608. This was offset by a decline in Tobacco revenues of $6,996 .

Cost of Sales. Total cost of sales were $287,236 for the three months ended September 30, 2014 compared to $200,835 for the three months ended September 30, 2013. The $86,401 (43.0% ) increase in cost of sales was due to an increase in real estate cost of sales of $90,598 related to the Douglas Elliman real estate commissions expense and $1,066 of cost of sales associated with the Zoom e-cigarette brand. This was offset by a $5,263decline in Tobacco cost of sales.

Expenses. Operating, selling, general and administrative expenses were $69,431 for the three months ended September 30, 2014 compared to $26,478 for the same period last year. This was an increase of $42,953 (162.2%) of which $39,697 was primarily related to the operating, selling and administrative expenses of Real Estate, $548 of Tobacco operating, selling, general and administrative expenses, $2,894of Zoom operating, selling, general and administrative expense offset by a decline in Corporate and Other expense of $186.

Operating income (loss).Operating income was $62,984 for the three months ended September 30, 2014 compared to an operating loss of $37,285 for the same period last year, an increase of $100,269 (268.9%). Tobacco operating income increased by $85,407, due to the absence in the 2014 period of $87,688 of litigation and judgment expense offset by the absence of $4,016 of income from the NPM Settlement. Real Estate operating income increased by $17,028 and Corporate and Other expenses declined by $186. This was offset by an increase in operating losses related to Zoom of $2,352.

Other income (expenses). Other expenses were$31,315 and $18,575 for the three months ended September 30, 2014 and 2013, respectively. For the three months ended September 30, 2014, other expenses primarily consisted of interest expense of $44,034, acceleration of interest expense related to the debt conversion of the 6.75% Variable Interest Senior Convertible Exchange Notes of $994, and an equity loss on real estate ventures of $3,258. This was offset by income of $7,127 from changes in fair value of derivatives embedded within convertible debt, other income of $2,466, equity income on long-term investments of $829 and a gain on sale of investment securities available for sale of $33. For the three months ended September 30, 2013, other expenses primarily consisted of interest expense of $33,583, loss on sale of investments available for sale of $99 and equity loss

51

on long-term investments of $53. This was offset by equity income from real estate ventures of $9,489, income of $2,800 from changes in fair value of derivatives embedded within convertible debt and other income of $2,871. The increase in interest expense in 2014 was primarily attributable to an increase in non-cash interest expenses associated with the amortization of debt discount of our convertible debt and increased debt.

Income (loss) before provision for income taxes. Income before income taxes for the three months ended September 30, 2014 was $31,669 compared to a loss of $55,860 for the three months ended September 30, 2013. The increase is attributable to the items discussed above.

Income tax expense (benefit). Income tax expense was $11,964 for the three months ended September 30, 2014 compared to a benefit of $18,969 for the three months ended September 30, 2013. 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. The discrete item for the three months ended September 30, 2014 related to an adjustment to the Corporation's marginal tax rate as a result of its acquisition of 20.59% of Douglas Elliman Realty, LLC in December 2013. For the three months ended September 30, 2013, our income tax benefit was primarily decreased by $2,362 due to the impact of the Engle progeny settlement due to differences in the Company's marginal tax rate and its anticipated effective annual income tax rate at September 30, 2013 and $251 due to an increase in our unrecognized tax benefits during the three-month period.

Tobacco.

Tobacco Revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in December 2013 and $0.60 per carton in June 2013 and May 2014.

All of our Tobacco sales were in the discount category in 2014 and 2013. For the three months ended September 30, 2014, tobacco revenues were $264,520 compared to $271,516 for the three months ended September 30, 2013. Revenues declined by 2.6% ($6,996) due to a decline in sales volume of $16,736 (approximately 128.4 million units) offset by a favorable price variance of $9,740.

Tobacco Cost of Sales. Our Tobacco cost of sales declined from $194,991 for the three months ended September 30, 2013 to $189,728 for the three months ended September 30, 2014. The major components of our Tobacco cost of sales are as follows:

		Three Months Ended
		September 30,
		2014		2013
Manufacturing overhead, raw materials and labor		$	33,315	$	35,957
Federal Excise Taxes, net		115,326		121,787
Tobacco quota buyout expense		6,425		6,547
FDA expense		4,012		3,855
MSA expense, net of market share exemption		30,650		26,845
	Total cost of sales	$	189,728	$	194,991

Tobacco gross profit was $74,792 for the three months ended September 30, 2014 compared to $72,509 (adjusting for the NPM Settlement) for the three months ended September 30, 2013. The $2,283 (3.1%) increase was due to higher margins associated with price increases. As a percentage of revenues (excluding Federal Excise Taxes), Tobacco gross profit was 50.1% in the 2014 period. Tobacco gross profit was 48.4%, adjusting for the NPM Settlement, in the 2013 period.

Tobacco expenses. Tobacco operating, selling, general and administrative expenses, excluding litigation settlement and judgment expenses, were $21,574 and $21,026 for the three months ended September 30, 2014 and 2013, respectively. The increase of $548 was due to an increase in legal expenses.

52

Tobacco operating income. Tobacco operating income was $52,993 for the three months ended September 30, 2014 compared to an operating loss of $32,414 for the same period last year. The Tobacco operating income increase of $85,407 was primarily associated with improved margins and the absence of the $86,213Engle progeny settlement charge and a decrease in litigation settlement and judgment charges of $1,475, offset by the income from the NPM Settlement of $4,016 in 2013.

E-Cigarettes.

Zoom entered the United States e-cigarette market in limited retail distribution outlets in 2013 and expanded distribution in 2014. E-Cigarettes revenues were $1,608 and E-Cigarettes cost of sales were $1,066 for the three months ended September 30, 2014. E-Cigarettes operating, selling, general and administrative expenses were $3,454 for the three months ended September 30, 2014 compared to $560 for the three months ended September 30, 2013. The increase was due to additional selling and administrative costs in 2014 associated with marketing and promotions activity. E-Cigarettes operating losses were $2,912 and $560 for the three months ended September 30, 2014 and 2013, respectively.

Real Estate.

Real Estate Revenues. Real Estate revenues were $153,748 and $6,425 for the three months ended ended September 30, 2014 and 2013, respectively. Real Estate revenues increased by $147,323, primarily related to Douglas Elliman. Douglas Elliman became a consolidated subsidiary of ours in December 2013.

Real Estate revenues and cost of sales for the three months ended September 30, 2014 were as follows:

\

	Three Months Ended
	September 30,
	2014		2013
Real Estate Revenues:
Commission and other brokerage income	$	145,407	$	5,850
Property management income	6,998		—
Title fees	800		—
Sales on facilities primarily from Escena	543		575
Total real estate revenues	$	153,748	$	6,425
Real Estate Cost of Sales:
Commission and other brokerage income	$	95,434	$	4,914
Cost of sales on facilities primarily from Escena	905		930
Other	103		—
Total real estate cost of sales	$	96,442	$	5,844

Real Estate expenses. Real Estate operating, selling, general and administrative expenses were $41,084 and $1,387 for the three months ended September 30, 2014 and 2013, respectively. Real Estate operating, selling, general and administrative expenses increased by $39,697 primarily related to the Douglas Elliman operations.

Real Estate operating income (loss). The Real Estate segment had operating income of $16,222 for the three months ended September 30, 2014 and an operating loss of $806 for the three months ended September 30, 2013. The increase of $17,028 was primarily related to the Douglas Elliman operations.

53

Corporate and Other.

Corporate and Other operating loss. Corporate and Other operating loss was $3,319 for the three months ended September 30, 2014 compared to $3,505 for 2013. Corporate and Other operating losses declined by $186 primarily as a result of lower rent expense in 2014 offset by increased stock compensation expense in the 2014 period.

Nine Months EndedSeptember 30, 2014 Compared to Nine Months EndedSeptember 30, 2013

Revenues.Total Revenues were $1,173,725 for the nine months ended September 30, 2014 compared to $780,336 for the nine months ended September 30, 2013. The $393,389 (50.4%) increase in revenues was due to an increase in Real Estate revenues of $395,982 primarily related to the addition of the Douglas Elliman revenues in 2014 and an increase of $9,977 in E-Cigarettes revenues associated with Zoom. This was offset by a $12,570 decrease in Tobacco revenues.

Cost of Sales. Total cost of sales were $805,555 for the nine months ended September 30, 2014 compared to $564,457 for the nine months ended September 30, 2013. The $241,098 (42.7% ) increase in cost of sales was due to an increase in Real Estate cost of sales of $245,451 related to the Douglas Elliman real estate commissions expense and $6,357 of E-Cigarettes cost of sales associated with the Zoom e-cigarette brand. This was offset by a $10,710decline in Tobacco cost of sales.

Expenses. Operating, selling, general and administrative expenses, net of the Engle progeny settlement charge and litigation settlement and judgment expense, were $200,431 for the nine months ended September 30, 2014 compared to $77,915 for the same period last year. This was an increase of $122,516 (157.2%) of which $112,241 was related to the operating, selling and administrative expenses of Real Estate, $10,160 was related to E-Cigarettes and $142 of Corporate and Other expenses. This was offset by a decline in Tobacco operating, selling and administrative expenses of $26.

Operating income (loss).Operating income was $166,014 for the nine months ended September 30, 2014 compared to $50,051 for the same period last year, an increase of $115,963 (231.7%). Tobacco operating income increased by $84,355 and real estate operating income increased by $38,290. This was offset by an increase in operating losses related to E-Cigarettes of $6,540 and an increase in Corporate and Other expenses of $142.

Other income (expenses). Other expenses were$108,742 and $84,399 for the nine months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014, other expenses primarily consisted of interest expense of $123,670, acceleration of interest expense related to the debt conversion of the 6.75% Variable Interest Senior Convertible Exchange Notes of $5,112, equity loss on real estate ventures of $3,002 and a loss on sale of investment securities available for sale of $38. This was offset by income of $7,447 from changes in fair value of derivatives embedded within convertible debt, equity income on long-term investments of $1,462 and interest and other income of $8,167. For the nine months ended September 30, 2013, other expenses primarily consisted of interest expense of $99,045 and loss on the extinguishment of debt of $21,458. This was offset by equity income from real estate ventures of $16,774, income of $8,299 from changes in fair value of derivatives embedded within convertible debt, gain on sale of investment securities available for sale of $5,110, other income of $5,151 and equity income on long-term investments of $770. The increase in interest expense in 2014 was primarily attributable to an increase in non-cash interest expenses associated with the amortization of debt discount of our convertible debt and increased debt.

Income (loss) before provision for income taxes. Income before income taxes was $57,272 for the nine months ended September 30, 2014, compared to a loss of $34,348 for the same periods in 2013. The increase is attributable to the items discussed above.

Income tax expense (benefit). Income tax expense was $21,007 for the nine months ended September 30, 2014 compared to an income tax benefit of $9,287 for the same period in 2013. 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 nine months ended September 30, 2014, our income tax expense was increased by $1,944 due primarily to a change in the blended state tax rate that resulted in the Company's reevaluation of its deferred taxes. For the nine months ended September 30, 2013, our income tax benefit was primarily decreased by $3,178 related to the Engle progeny settlement and 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 September 30, 2013 and $373 due to an increase in our unrecognized tax benefits during the nine-month period.

54

Tobacco.

Tobacco Revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in December 2013 and $0.60 per carton in June 2013 and May 2014.

All of our Tobacco sales were in the discount category in 2014 and 2013. For the nine months ended September 30, 2014, tobacco revenues were $748,468 compared to $761,038 for the nine months ended September 30, 2013. Revenues declined by 1.7% ($12,570) due to a decline in sales volume of $40,267 (approximately 315.2 million units) offset by a favorable price variance of $27,697.

Tobacco Cost of Sales. Our Tobacco cost of sales declined from $548,377 for the nine months ended September 30, 2013 to $537,667 for the nine months ended September 30, 2014. The major components of our Tobacco cost of sales are as follows:

		Nine Months Ended
		September 30,
		2014		2013
Manufacturing overhead, raw materials and labor		$	94,779	$	93,961
Federal Excise Taxes, net		327,434		343,294
Tobacco quota buyout expense		20,697		21,553
FDA expense		13,017		12,765
MSA expense, net of market share exemption		81,740		76,804
	Total cost of sales	$	537,667	$	548,377

Adjusting for the NPM Settlement, Tobacco gross profit was $209,382 for the nine months ended September 30, 2014 compared to $201,698 for the nine months ended September 30, 2013. The $7,684 (3.8%) increase was due to higher margins associated with price increases primarily on the PYRAMID brand. As a percentage of revenues (excluding Federal Excise Taxes and adjusting for the NPM Settlements), Tobacco gross profit was 49.7% in the 2014 period and 48.3% in the 2013 period .

Tobacco expenses. Tobacco operating, selling, general and administrative expenses excluding litigation settlement judgment expenses were $61,682 for the nine months ended September 30, 2014 compared to $61,708 for the nine months ended September 30, 2013.

Tobacco operating income. Tobacco operating income was $147,395 for the nine months ended September 30, 2014 compared to $63,040 for the same period last year. The Tobacco operating income increase of $84,355 was primarily associated with improved margins and the the absence of the $86,213Engle progeny settlement charge offset by a decrease in income from the NPM Settlement of $9,544 in 2013.

E-Cigarettes.

Zoom entered the emerging United States electronic cigarette ("e-cigarette") market in limited retail distribution outlets in 2013 and expanded distribution in 2014. E-Cigarettes revenues were $9,977 and our E-Cigarettes cost of sales were $6,357 for the nine months ended September 30, 2014. E-Cigarettes operating, selling, general and administrative expenses were $10,720 and $560 for the nine months ended September 30, 2014 and 2013, respectively. The increase was due to additional selling and administrative costs in 2014 associated with marketing and promotions activity. E-Cigarettes operating losses were $7,100 and $560 for the nine months ended September 30, 2014 and 2013, respectively.

Real Estate.

Real Estate Revenues. Real Estate revenues were $415,280 and $19,298 for the nine months ended ended September 30, 2014 and 2013, respectively. Real Estate revenues increased by $395,982 primarily related to the Douglas Elliman operations. Douglas Elliman became a consolidated subsidiary of ours in December 2013.

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Real Estate revenues and cost of sales for the nine months ended ended September 30, 2014 were as follows:

	Nine Months Ended
	September 30,
	2014		2013
Real Estate Revenues:
Commission and other brokerage income	$	372,738	$	15,368
Property management income	22,111		—
Title fees	2,134		—
Indian Creek	14,400		—
Sales on facilities primarily from Escena	3,897		3,930
Total real estate revenues	$	415,280	$	19,298
Real Estate Cost of Sales:
Commission and other brokerage income	$	248,213	$	12,874
Indian Creek cost of sales	9,987		—
Cost of sales on facilities primarily from Escena	3,052		3,206
Title fees	279		—
Total real estate cost of sales	$	261,531	$	16,080

Real Estate expenses. Real estate operating, selling, general and administrative expenses were $116,882 and $4,641 for the nine months ended September 30, 2014 and 2013, respectively. Real estate operating, selling, general and administrative expenses increased by $112,241 primarily related to the Douglas Elliman operations.

Real Estate operating income (loss). The real estate segment had operating income of $36,867 for the nine months ended September 30, 2014 compared to an operating loss of $1,423 for the nine months ended September 30, 2013. The increase in operating income of $38,290 was primarily related to the Douglas Elliman operations.

Corporate and other.

Corporate and other loss. The operating loss at the corporate segment was $11,148 for the nine months ended September 30, 2014 compared to $11,006 for the same period in 2013.

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Summary of Real Estate Investments

We own, and seek to acquire investment interests in various domestic and international real estate projects through debt and equity investments. Our current real estate investments primarily include the following projects as of September 30, 2014:

	(Dollars in Thousands. Area and Unit Information in Ones)
	Location	Date of Initial Investment	Percentage Owned		Net Amount Invested		Earnings (Losses)			Carrying Value as of September 30, 2014		Future Capital Commit- ments from New Valley		Projected Residential and/or Hotel Area		Projected Retail Area		Projected Number of Residential Lots, Units and/or Hotel Rooms		Projected Construction Start Date	Projected Construction End Date
Escena, net	Master planned community, golf course, restaurant and shop in Palm Springs, CA	March 2008	100	%	N/A		N/A			$	10,643	$	—	450	Acres			667 450	R Lots H	N/A	N/A
Real estate held for sale, net					—		—			10,643
10 Madison Square Park West (f/k/a 1107 Broadway)	Flatiron District/NoMad neighborhood, Manhattan, NY	June 2011	5.0	%	$	4,130	$	2,254		$	6,384	—		260,000	SF	17,000	SF	124	R	August 2012	August 2015
The Whitman	Flatiron District/NoMad neighborhood, Manhattan, NY	October 2011	12.0	%	—		526			526		—		24,279	SF	4,698	SF	4	R	October 2011	February 2014
The Marquand	Upper East Side, Manhattan, NY	December 2011	18.0	%	7,000		5,000			12,000		—		87,887	SF	—		28	R	June 2012	January 2015
11 Beach Street	TriBeCa, Manhattan, NY	June 2012	49.5	%	12,328		—			12,328		—		97,090	SF	—		27	R	May 2014	May 2016
20 Times Square (f/k/a 701 Seventh Avenue)	Times Square, Manhattan, NY	October 2012	11.5	%	12,481		—			12,481		—		280,000	SF	80,000	SF	452	H	September 2013	March 2017
101 Murray Street	TriBeCa, Manhattan, NY	July 2013	25.0	%	25,269		—			25,269		—		320,000	SF	TBD		139	R	September 2014	March 2018
160 Leroy Street	West Greenwich Village, Manhattan, NY	January 2013	5.0	%	1,353		—			1,353		—		130,137	SF	—		30 to 50	R	July 2015	July 2017
PUBLIC Chrystie House (f/k/a Chrystie Street)	Lower East Side, Manhattan, NY	December 2012	18.4	%	3,180		—			3,180		—		217,000	SF	43,000	SF	11 367	R H	June 2014	December 2016
25-19 43rd Avenue	Long Island City, NY	May 2014	9.9	%	733		—			733				87,000	SF	—		86	R	September 2014	September 2016
Queens Plaza (f/k/a 23-10 Queens Plaza South)	Long Island City, NY	December 2012	45.4	%	12,590		—			12,590		—		472,574	SF	—		391	R	March 2014	December 2016
8701 Collins Avenue	Miami Beach, FL	December 2013	15.0	%	4,455		179			4,634		—		262,000	SF	TBD		TBD		October 2015	July 2017
125 Greenwich Street	Financial District, Manhattan, NY	August 2014	13.3	%	9,308		—			9,308		—		359,000	SF	TBD		TBD	R	March 2015	TBD
Condominium and Mixed Use Development					$	92,827	$	7,959		$	100,786
Maryland Portfolio	Primarily Baltimore County, MD	July 2012	7.5	%	$	3,933	$	(585	)	$	3,348	—		N/A		N/A		5,517	R	N/A	N/A
ST Portfolio	Houston, TX; Phoenix, AZ; San Pedro, CA and Stamford, CT	November 2013	16.4	%	16,365		(857		)	15,508		—		1,018,404	SF	24,987	SF	761	R	N/A	N/A
Apartment Buildings					$	20,298	$	(1,442	)	$	18,856
Park Lane Hotel	Central Park South, Manhattan, NY	November 2013	5.0	%	$	20,716	$	(2,619	)	$	18,097	—		445,600	SF	—		628	H	N/A	N/A
Hotel Taiwana	St. Barthelemy, French West Indies	October 2011	17.0	%	7,426		(576		)	6,850		—		61,300	SF	4,300	SF	30	H	N/A	N/A
Coral Beach	Coral Beach, Bermuda	December 2013	49.0	%	3,618		(910		)	2,708		—		52	Acres	—		87	H	N/A	N/A
Hotels					$	31,760	$	(4,105	)	$	27,655
Milanosesto Holdings	Milan, Italy	October 2011	7.2	%	$	5,037	$	—		$	5,037	—		322	Acres	TBD		TBD		2014	2024
Land Development					$	5,037	$	—		$	5,037
N/A - Not applicable	SF - Square feet	H - Hotel rooms
TBD -To be determined	R - Residential Units	R Lots - Residential lots

Other investments in real estate ventures relate to an investment in a mortgage company and an insurance company by Douglas Elliman with a carrying value of $1,947 as of September 30, 2014.

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Liquidity and Capital Resources

Cash and cash equivalents increased by $145,950 for the nine months endedSeptember 30, 2014 and decreased by $145,394 for the nine months endedSeptember 30, 2013.

Cash provided from operations was $100,044 and $55,244 for the nine months endedSeptember 30, 2014 and 2013, respectively. The change primarily related to cash payments in the 2013 period associated with the extinguishment of our 11% Senior Secured Notes due 2015, increased operating income in the 2014 period and the timing of payments of accruals.  The amount was partially offset by the  Engle progeny settlement payment.

Cash used in investing activities was $195,807 and $103,208 for the nine months endedSeptember 30, 2014 and 2013, respectively. In the first nine months of 2014, cash used in investing activities was for the purchase of investment securities of $312,919, investment in real estate ventures of $29,378, capital expenditures of $20,746, purchase of long-term investments of $12,000, an increase in non-current restricted assets of $1,108, an increase in cash surrender value of corporate-owned life insurance policies of $435, an issuance of notes receivable of $250 and purchase of subsidiaries of $250. This was offset by the sale of investment securities of $174,253, distributions from real estate ventures of $5,540, proceeds from the liquidation of long-term investments of $549, collections of notes receivable of $933 and proceeds from the sale of fixed assets of $4. In the first nine months of 2013, cash used in investing activities was for the purchase of investment securities of $129,483, investment in real estate ventures of $45,977, capital expenditures of $8,686, investments in consolidated real estate business of $7,697, purchase of long-term investments of $5,000, an increase in non-current restricted assets of $553 and an increase in cash surrender value of corporate-owned life insurance policies of $470. This was offset by the sale of investment securities of $82,649, collections of notes receivable of $9,460, distributions from real estate ventures of $2,463, the proceeds from the sale or liquidation of long-term investments of $75 and the proceeds from the sale of fixed assets of $11.

Cash provided by financing activities was $241,713 for the nine months endedSeptember 30, 2014 compared to cash used in financing activities of $97,430 for the nine months endedSeptember 30, 2013. In the first nine months of 2014, cash was provided by the proceeds from debt issuance of $413,918, proceeds from the exercise of Vector options of $4,407 and tax benefit of options exercised of $937. This was offset by cash used for the distributions on common stock of $122,051, payment of deferred financing costs of $12,360, repayment of debt of $10,305, net repayments of debt under the revolver of $27,972 and distributions to non-controlling interest of $4,861. In the first nine months of 2013, cash used in financing activities was used for the repayment of debt of $420,710, distributions on common stock of $107,302, net repayments of debt under the revolver of $12,429 and deferred financing costs of $11,750. This was offset by proceeds from debt issuance of $454,200, proceeds from the exercise of Vector options of $528, and tax benefit of options exercised of $33.

LiggettCredit Facility and Liggett Term Loan Under Credit Facility. As of September 30, 2014, $6,115 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the Credit Facility was approximately $43,885 based on eligible collateral at September 30, 2014. At September 30, 2014, management believed that Liggett was in compliance with all covenants under the credit facility; Liggett's EBITDA, as defined, were approximately $125,687 for the twelve months ended September 30, 2014.

Vector.   On March 14, 2014, the holder of the 6.75% Variable Interest Senior Convertible Note due 2014 converted $25,000 principal balance of the $50,000 Note into 2,121,479 of our common shares. On May 20, 2014, a holder of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $7,500 principal balance of the $107,530 Notes into 560,987 of our common shares. In August 2014, holders of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $32,415 principal balance of the $107,530 Notes into 2,424,584 of our common shares.

On March 24, 2014, we completed the sale of $258,750 of our Variable Interest Convertible Senior Notes due 2020 and received net proceeds from the sale of the Notes of approximately $250,300. On April 15, 2014, we completed the sale of principal amount of our 7.75% Senior Secured Notes due 2021 for a price of 106.750% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. We received net proceeds of approximately $158,700. In August 2014, we completed an offer to exchange the 7.75% senior secured notes issued in April 2014 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 net proceeds of both issuances will be used for general corporate purposes, including for additional investments in real estate and in our tobacco business. We may also consider using a portion of the net proceeds from the sale of the Notes to address upcoming debt maturities.

The indenture of our 7.75% senior secured notes due 2021 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

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

	Indenture	September 30, 2014	December 31, 2013
Covenant	Requirement
Consolidated EBITDA, as defined	$75,000	$254,694	$264,958
Leverage ratio, as defined	<3.0 to 1	1.17 to 1	1.22 to 1
Secured leverage ratio, as defined	<1.5 to 1	Negative	0.5 to 1

We and our subsidiaries have significant indebtedness and debt service obligations. At September 30, 2014, we and our subsidiaries had total outstanding indebtedness of $1,204,143. Approximately $92,615  of our 6.75% convertible notes mature in 2014, $230,000 of our 7.5% convertible notes mature in 2019, $258,750 of our 5.5% variable interest senior convertible notes mature in 2020, and $600,000 of our 7.75% senior secured notes mature in 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 and real estate 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 $380,400, investment securities available for sale of approximately $333,900, long-term investments with an estimated value of approximately $51,800 and availability under Liggett's credit facility of approximately $43,900 at September 30, 2014. 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 September 30, 2014, approximately $6,100 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 September 30, 2014, 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 $61.

In addition, as of September 30, 2014, $325,910 ($581,365 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 $4,098 with approximately $1 resulting from the embedded

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derivative associated with our 6.75% note due 2014, $3 resulting from the embedded derivative associated with our 6.75% exchange notes due 2014, $1,895 resulting from the embedded derivative associated with the 7.5% variable interest senior convertible notes, and the remaining $2,199 resulting from the embedded derivative associated with our 5.5% variable interest senior convertible debentures due 2020. An increase in our quarterly dividend rate by $0.10 per share would increase interest expense by approximately $9,800 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 based 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 $185,583 and $181,403. We recorded the fair market value of our embedded derivatives at the midpoint of the range at $183,470 as of September 30, 2014. The estimated fair market value of our embedded derivatives could change significantly based on future market conditions.

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

There are no material changes from the Legislation and Regulation section 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, 2013. Please refer to that section and the information below for disclosures regarding the critical accounting policies related to our business.

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:

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• 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,

• 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, 2013 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 third quarter of 2014 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 7, 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, 2013.

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Liggett faces intense competition in the domestic tobacco industry.

Liggett is considerably smaller and has fewer resources than its major competitors, and, as a result, has a more limited ability to respond to market developments. Management Science Associates’ data indicate that the three largest cigarette manufacturers controlled approximately 85.3% of the United States cigarette market during 2013. Philip Morris is the largest manufacturer in the market, and its profits are derived principally from its sale of premium cigarettes. Philip Morris had approximately 61.2% of the premium segment and 47.4% of the total domestic market during 2013. During 2013, all of Liggett’s sales were in the discount segment, and its share of the total domestic cigarette market was 3.3%. Philip Morris and RJ Reynolds, the two largest cigarette manufacturers, historically, because of their dominant market share, have been able to determine cigarette prices for the various pricing tiers within the industry.

Consolidation in the industry could adversely affect our ability to compete in the U.S. cigarette market.  For example, RJ Reynolds’ proposed merger with Lorillard Tobacco Company, which would consolidate more than 80% of the United States cigarette market within the control of two cigarette manufacturers, could make it more difficult for Liggett and Vector Tobacco to compete for shelf space in retail outlets and could impact price competition in the market, either of which could have a material adverse effect on our sales volume, operating income and cash flows.

We have significant liquidity commitments

We have certain liquidity commitments that could require the use of our existing cash resources. As of September 30, 2014, our corporate expenditures (exclusive of Liggett, Vector Tobacco and New Valley) and other potential liquidity requirements over the next 12 months could include the following:

• cash interest expense of approximately $98.0 million,

• retirement of our 6.75% variable interest senior convertible notes of $92.6 million;

• dividends on our outstanding common shares (currently at an annual rate of approximately $191.6 million), 

• Engle progeny installment payment of $3.5 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 September 30, 2014, we and our subsidiaries had total outstanding indebtedness of $1.2 billion. Approximately $92.6 million  of our 6.75% convertible notes mature in 2014, $230 million of our 7.5% convertible notes mature in 2019 and $600 million of our 7.75% senior secured notes mature in 2021. The $600 million of our 7.75% senior secured notes due 2021 includes an additional $150 million of indebtedness we incurred in connection with the April 2014 offering. We incurred an additional $258.8 million of indebtedness in connection with the March 2014 offering of our 5.5% variable interest senior convertible notes due 2020. 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.

Other

Zoom’s e-cigarette business is subject to substantial risks, uncertainties and contingencies which include, without limitation, the challenges inherent in new product development initiatives, the ability to raise capital and manage the growth of its business, potential disputes concerning Zoom’s intellectual property, potential extensive government regulation or prohibition, technology

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obsolescence, market acceptance of Zoom’s products and competition from companies with greater resources.  Our exposure to Zoom, as of September 30, 2014, was approximately $10.7 million which was comprised primarily of Zoom’s inventory.

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 September 30, 2014, except for approximately 5,195,856 shares of our common stock issued as a stock dividend on September 26, 2104. The issuance of the shares in connection with the stock dividend did not involve a "sale" under the Securities Act of 1933.

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Item 6.    Exhibits

10.1	Performance-Based Restricted Share Award Agreement, pursuant to Vector Group Ltd. Management Incentive Plan, dated as of July 23, 2014 by and between Vector Group Ltd. and Howard M. Lorber.
12.1	Computation of Ratio of Earnings to Fixed Charges for each of the five years within the period ended December 31, 2013 and for each of the nine months within the periods ended September 30, 2014 and 2013.
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:	October 31, 2014

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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)

	Nine Months Ended September 30,				Year Ended December 31,
	2014		2013		2013		2012		2011		2010		2009
Earnings as defined:
Pre-tax income (loss)	57,272		(34,348	)	63,487		53,717		123,157		85,570		28,537
Distributions from investees	3,404		3,341		4,251		19,169		9,322		12,212		6,715
Interest expense	121,335		90,746		147,084		132,538		93,939		72,572		104,415
(Income) in equity of affiliate	(3,002	)	(16,774	)	(22,925	)	(29,764	)	(19,966	)	(23,963	)	(15,213	)
Interest portion of rental expense (1)	5,558		1,498		2,174		1,367		1,438		1,223		1,301
Total earnings	184,567		44,463		194,071		177,027		207,890		147,614		125,755
Fixed charges as defined:
Interest expense	121,335		90,746		147,084		132,538		93,939		72,572		104,415
Interest portion of rent expense (1)	5,558		1,498		2,174		1,367		1,438		1,223		1,301
Total fixed charges	126,893		92,244		149,258		133,905		95,377		73,795		105,716
Ratio of earnings to fixed charges	1.45		0.48		1.3		1.32		2.18		2.00		1.19

________________________

(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: October 31, 2014

/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: October 31, 2014

/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 September 30, 2014 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.

October 31, 2014

/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 September 30, 2014 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.

October 31, 2014

/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 until January 2008 to file individual lawsuits. Lawsuits by individuals requesting the benefit of the Engle ruling are referred to as the “Engle progeny” cases. In October 2013, the Company announced a settlement of the claims of over 4,900 Engle progeny plaintiffs. Notwithstanding the settlement, the claims of approximately 330 Engle progeny plaintiffs remain pending. For more information on the Engle case and on the settlement, see “Note 7. Contingencies.”

(i) Engle Progeny Cases with trial dates through September 30, 2015.

Boatright,et al.v. R.J. Reynolds,et al., Case No. 53-2011-CA-000158-000-WH, Circuit Court of the 10^th Judicial Circuit, Polk County (case filed 01/12/11).  Two individuals suing.  Trial commenced on 10/20/14.

Bradley v. R.J. Reynolds,et al., Case No. 2008-CA-2775, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 07/08/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 05/04/15.

Caprio v. R.J. Reynolds,et al., Case No. 07-45316, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 12/28/07). One individual suing. The case is scheduled for trial starting 01/19/15.

Collar v. R.J. Reynolds, et al., Case No. 31 2011-CA-000115, Circuit Court of the 19^th Judicial Circuit, Indian River County (case filed 02/08/11).  One individual suing.  The case is scheduled for trial starting 02/10/15.

Cooper v. R.J. Reynolds,et al., Case No. 08-026350, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/09/08).  One individual suing.  The case is scheduled for the trial starting 04/01/15 - 03/27/15.

Kanniard v. R.J. Reynolds, et al., Case No. 2007-CA-3022, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 07/08/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is set for trial as the back up to Harris starting 05/25/15. If it is not reached during that setting, it is set for trial starting 11/09/15.

Ledea v. R.J. Reynolds,et al., Case No. 07-41730 CA 22, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 12/06/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled to be tried during in September 2015.

McCoy v. R.J. Reynolds,et al., Case No. 08-25806, 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 to be tried during the trial period of 01/12/15 - 03/27/15.

Merino v. R.J. Reynolds,et al., Case No. 08-01287 CA 25, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 01/10/08).  One individual suing.  The case is set for trial starting 07/06/15.

Perrotto v. R.J. Reynolds,et al.., Case No. 502007-CA-023841, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 12/21/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting on 10/31/14. 

Pijuan,et al.v. R.J. Reynolds,et al., Case No. 10-8359, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 02/08/10).  Two individuals suing.  The case is scheduled for trial starting 02/02/15. 

Pollari v. R.J. Reynolds, et al., Case No. 14-1563, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 01/29/14). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled to be tried during the trial period of 01/12/15 - 03/27/15.

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Rogers v. R.J Reynolds,et al., Case No. 08-CA-000533 19, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 01/04/08).  One individual suing.  The case is scheduled to be tried during the trial period of 03/30/15 - 06/12/15.

Shulman,et al.v. R.J. Reynolds,et al., Case No. 2007 CA 023832 MB AF, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/04/08).  One individual suing.  The case is scheduled for trial starting 04/10/15.

Sommers v. R.J. Reynolds,et al., Case No. 08-1464, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 1/11/08).  One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 11/03/14. 

Wilfong v. R.J. Reynolds,et al., Case No. 2007-CA-2541, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 07/08/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is set for trial as the back up to Bradley starting 05/04/15.   If it is not reached during that setting, it is set for trial starting 09/14/15.

(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 that proceeded to jury trial in November 2012. In December 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 July 2014 the First District Court of Appeal affirmed the lower court, but certified an issue of conflict with another case. Defendants filed a petition with the Florida Supreme Court seeking review of the decision. The appeal is stayed pending the outcome of the appeal in Hess.

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 that 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 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 plus interest was entered against all of the defendants. In addition, the judgment awarded plaintiff $7,600,000 in punitive damages against Liggett. An order of entitlement to attorneys' fees and costs was also entered against the defendants. In September 2012, the defendants filed a notice of appeal to the Fourth District Court 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).  This was a wrongful death action that proceeded to jury trial in April 2013. In May 2013, the jury returned a verdict in favor of the plaintiff and awarded compensatory damages in the amount of $2,055,000. The jury apportioned fault as follows: Decedent - 40%, RJR - 30%, Lorillard - 20% and Liggett - 10% ($205,500). In June 2013, the trial court granted defendants' motion for a new trial. Plaintiff filed a notice of appeal. Briefing is underway.

Irimi v. R.J. Reynolds,et al., Case No. 08-26337 19, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/30/08).  One individual sued on behalf of the estate and survivors of a deceased smoker.  Trial commenced on July 30, 2014. On August 28, 2014 the jury returned a verdict in favor of plaintiff and awarded compensatory damages in the amount of $3,123,426. The jury apportioned fault as follows: Decedent - 70%,

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R.J. Reynolds - 14.5%, Lorillard - 14.5% and Liggett - 1% ($31,234). The verdict has not been reduced to a judgment.

Lambert v. R.J. Reynolds,et al., Case No. 2007-013530-CI-19, Circuit Court of the 6^th Judicial Circuit, Pinellas County (case filed 02/05/08).  One individual sued on behalf of the estate and survivors of a deceased smoker.  Liggett was the only defendant at trial. Trial commenced on September 15, 2014. On October 1, 2014, the jury returned a verdict in favor of plaintiff and awarded compensatory damages in the amount of $3,600,000. In addition, $9,500,000 in punitive damages were awarded by the jury. The jury apportioned fault as follows: Decedent - 70% and Liggett - 30%, although because Liggett was found responsible for an intentional tort, the court may not reduce the compensatory award by the decedent's comparative fault. The verdict has not been reduced to a judgment.

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 that 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: Decedent - 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. 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, it ruled that the award was excessive.  Plaintiff filed a motion for rehearing which was denied. Both parties filed notices to involve the discretionary jurisdiction of the Florida Supreme Court. The appeal is stayed pending the outcome of the appeal in Hess. 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 that 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 - 5% ($225,000) and Lorillard - 5%. No punitive damages were awarded. In August 2013, the Fourth District Court of Appeal affirmed. Defendants' notice to invoke the discretionary jurisdiction of the Florida Supreme Court was denied. Liggett satisfied the judgment on October 22, 2014, and other than an issue regarding the calculation of interest on the judgment and Liggett's taxable costs, this matter is concluded.

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 that 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: Decedent - 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. In September 2013, the First District Court of Appeal affirmed. Liggett satisfied the merits judgment on January 31, 2014. 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 trial court’s ruling that plaintiff was entitled to an attorney fee award.  On June 24, 2014, the appellate court reversed the trial court’s award of attorneys’ fees and remanded the case to the trial court to consider an award of attorneys’ fees on an alternative basis. Discovery is ongoing regarding the amount of attorneys' fees to which plaintiff may be entitled.

B. Other Individual Cases.

3

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.

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 on behalf of the estate and survivors of a deceased smoker.

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,et al., 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.

Capone v. Philip Morris Inc.,et al., Case No. 05-10312-CA-24, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 05/12/14). One individual suing.

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.

4

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 on behalf 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.

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.

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.

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.

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.

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 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, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 09/11/03). One individual suing.

5

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

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

Cook,et al.v. Union Carbide Corporation,et al., Case No. 24-X-13-000445, Circuit Court, Baltimore City (case filed 09/12/13). Two individuals suing. Plaintiff and his wife seek damages allegedly caused by exposure to asbestos and cigarettes, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants. In November 2013, defendants moved to dismiss the complaint. The motion is pending.

Cowens,et al.v. John Crane-Houdaille Inc.,et al., Case No. 24-X-11-000335, Circuit Court, Baltimore City (case filed 09/12/13). Three individuals suing. Plaintiffs are the surviving children of decedent Frank E. Cowens. 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 Vector Tobacco Inc. In January 2014, defendants moved to dismiss the complaint. The motion is pending.

Culotta,et al. v. Union Carbide Corporation,et al., Case No. 24-X-12-000690, Circuit Court, Baltimore City (case filed 06/20/13). One individual suing. Plaintiff 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. In July 2013, defendants moved to dismiss the complaint. The motion is pending.

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 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. In July 2013, defendants moved to dismiss the complaint. The motion is pending.

Thorpe,et al. v. Union Carbide Corporation,et al., Case No. 24-X-14-000225, Circuit Court, Baltimore City (case 05/16/14). Two individuals suing. Plaintiffs are the surviving children of decedent Alice P. Thorpe. 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 Group LLC. In July 2014, defendants moved to dismiss the complaint. The motion is pending.

Wilt,et al.v. Union Carbide Corporation,et al., Case No. 24-X-12-000529, Circuit Court, Baltimore City (case filed 04/24/14). Two individuals suing. Plaintiff and his wife seek damages allegedly caused by exposure to asbestos and cigarettes, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants. In July 2014, defendants moved to dismiss the complaint. The motion is pending.

6

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

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 is 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. Liggett appealed the decision. Oral argument is scheduled for December 11, 2014.

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 industry's 1998 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 industry's 1998 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.

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.

7

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. After two mistrials, in May 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. Post trial motions were denied. The issue of damages was reserved for further proceedings not yet scheduled. A final judgment as to liability was issued in October 2013, after which the plaintiff filed a notice of appeal with respect to the defense verdicts obtained on five of the claims. Briefing of the appeal is underway. The defendants did not appeal the verdict in favor of the plaintiff on the "failure to instruct" claim which impacted less than 30 of the plaintiffs.

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 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, were exposed to secondhand smoke from cigarettes that were manufactured by the defendants, including Liggett, and suffered injury as a result of that exposure. No class certification hearing has been held. The plaintiffs sought to recover an unspecified amount of compensatory and punitive damages. No class certification hearing has been held. In October 2004, the trial court stayed the Young case pending the outcome of an appeal in Scott v. American Tobacco Co., a case seeking medical monitoring for Louisiana smokers in which Liggett was not a party. The Scott case was tried to a jury which denied the medical monitoring claim but determined instead that the defendants must establish a smoking cessation program. That program is ongoing. The Scott case is now final.

Despite the fact that Scott is concluded, plaintiffs’ counsel has not activated Young, but instead moved the court for a further stay in the spring of 2013.  The defendants did not oppose the stay and it was entered by consent. 

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, codefendants 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 2014, the court of appeals affirmed the lower court's decision. On August 18, 2014, plaintiffs submitted a petition for review to the Kansas Supreme Court. A decision is pending.

8

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.

9

XML

Summary of Significant Accounting Policies Schedule of Other Income (Loss), Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Gain on warrants	$ 991	$ 135	$ 868	$ 172
Interest income	1,476	2,647	3,665	4,123
Accretion of interest income from debt discount on notes receivable	11	81	87	704
Out-of-period adjustment	0	0	1,231	0
Acceleration of closing fee related to termination of Douglas Elliman joint venture	0	0	2,335	0
Gain on long-term investment	0	0	0	142
Other (expense) income	(12)	8	(19)	10
Other income, net	$ 2,466	$ 2,871	$ 8,167	$ 5,151

XML

Notes Payable, Long-Term Debt and Other Obligations (Textuals) (Details) (USD $)	3 Months Ended		9 Months Ended			0 Months Ended					0 Months Ended	3 Months Ended		9 Months Ended			0 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended				0 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Apr. 15, 2014 Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Sep. 30, 2014 Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Dec. 31, 2013 Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Feb. 28, 2013 Secured Debt [Member] 7.75% Senior Secured Notes Due 2021 [Member]	Oct. 29, 2013 Convertible Debt [Member]	Mar. 14, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Sep. 30, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Sep. 30, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Sep. 30, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Sep. 30, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Dec. 31, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	May 20, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Aug. 31, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	May 20, 2014 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Dec. 31, 2013 Convertible Debt [Member] 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Mar. 24, 2014 Convertible Debt [Member] 5.5% Variable Interest Senior Convertible Notes due 2020	Sep. 30, 2014 Convertible Debt [Member] 5.5% Variable Interest Senior Convertible Notes due 2020	Dec. 31, 2013 Convertible Debt [Member] 5.5% Variable Interest Senior Convertible Notes due 2020	Sep. 30, 2014 Convertible Debt [Member] Variable Interest 7.50% Senior Convertible Debentures [Member]	Mar. 24, 2014 Convertible Debt [Member] Variable Interest 7.50% Senior Convertible Debentures [Member]	Sep. 30, 2014 Line of Credit [Member] Revolving Credit and Term Loan Facility [Member] Liggett [Member]
Debt Instrument [Line Items]
Interest rate									7.75%		6.75%	6.75%		6.75%				6.75%	6.75%		6.75%		6.75%		5.50%	5.50%
Debt amount						$ 150,000,000																			$ 258,750,000
Proceeds from debt issuance			413,918,000	454,200,000		158,700,000																			250,300,000
Redemption price						106.75%
Conversion price												$ 11.22		$ 11.22					$ 12.73		$ 12.73				$ 25.8690190476	$ 25.87		$ 16.78
Converted amount											25,000,000						7,500,000	32,415,000
Convertible principal balance											50,000,000						107,530,000
Acceleration of interest expense												0	0	3,679,000	0				994,000	0	1,433,000	0
Note conversion (in shares)											2,121,479			89.1021			560,987	2,424,584			78.5381					38.6563		59.5946
Acceleration of interest expense related to debt conversion	994,000	0	5,112,000	0										3,679,000
Increase in equity from conversion														25,000,000				32,415,000			7,500,000
Long-term Debt	958,265,000		958,265,000		692,343,000		609,577,000	450,000,000			25,000,000	23,267,000		23,267,000		30,689,000		67,615,000	64,902,000		64,902,000			81,586,000		157,083,000	0
Interest Rate							7.75%																		1.75%
Conversion basis amount										1,000																		1,000,000
Conversion basis shares																									38.6562783135
Percent of principal																													100.00%
Amount outstanding																														6,115,000
Remaining borrowing capacity																														$ 43,885,000

XML

New Valley LLC Schedule of Consolidated Real Estate Investments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Real estate held for sale, net	$ 10,643	$ 20,911
New Valley LLC [Member]
Investment Holdings [Line Items]
Real estate held for sale, net	10,643	20,911
New Valley LLC [Member] | Escena [Member]
Investment Holdings [Line Items]
Real estate held for sale, net	10,643	10,625
New Valley LLC [Member] | Indian Creek [Member]
Investment Holdings [Line Items]
Real estate held for sale, net	$ 0	$ 10,286

XML

Contingencies (Details) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended	1 Months Ended	9 Months Ended			9 Months Ended																		9 Months Ended	0 Months Ended	1 Months Ended	12 Months Ended			1 Months Ended	3 Months Ended	9 Months Ended	1 Months Ended				9 Months Ended				9 Months Ended	0 Months Ended				0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Liggett Only Cases [Member] case	Sep. 30, 2014 Tobacco Litigation Personal Injury Cases [Member] case	Sep. 30, 2014 Parsons v. AC & S Inc. [Member] defendant	Jul. 31, 2000 Engle Case Class Action [Member]	Sep. 30, 2014 Hess Case [Member]	Sep. 30, 2013 Liggett and Vector Tobacco [Member] NPM Adjustment [Member]	Sep. 30, 2014 Liggett and Vector Tobacco [Member] NPM Adjustment [Member]	Sep. 30, 2014 Liggett [Member]	Sep. 30, 2013 Liggett [Member]	Sep. 30, 2014 Liggett [Member] Florida [Member] case	Sep. 30, 2014 Liggett [Member] New York [Member] case	Sep. 30, 2014 Liggett [Member] Maryland [Member] case	Sep. 30, 2014 Liggett [Member] Louisiana [Member] case	Sep. 30, 2014 Liggett [Member] West Virginia [Member] case	Sep. 30, 2014 Liggett [Member] Missouri [Member] case	Sep. 30, 2014 Liggett [Member] Ohio [Member] case	Sep. 30, 2014 Liggett [Member] West Virginia State Court Cases [Member] case	Sep. 30, 2014 Liggett [Member] Individual Actions [Member] case	Sep. 30, 2014 Liggett [Member] Class Actions [Member] case	Sep. 30, 2014 Liggett [Member] Price Fixing [Member] case	Sep. 30, 2014 Liggett [Member] Tobacco Litigation Personal Injury Cases [Member] case verdict	Sep. 30, 2014 Liggett [Member] Health Care Cost Recovery Actions [Member] case	Sep. 30, 2014 Liggett [Member] Gross Versus Net Dispute [Member]	Dec. 31, 2013 Liggett [Member] Gross Versus Net Dispute [Member] Maximum [Member]	Sep. 30, 2014 Liggett [Member] Putney, Tullo, Calloway, Buchanan, Cohen and Rizzuto [Member]	Sep. 30, 2013 Liggett [Member] Engle Progeny Settlement [Member]	Oct. 23, 2013 Liggett [Member] Engle Progeny Cases [Member] plaintiff	Oct. 31, 2013 Liggett [Member] Engle Progeny Cases [Member] case	Dec. 31, 2013 Liggett [Member] Engle Progeny Cases [Member]	Sep. 30, 2014 Liggett [Member] Engle Progeny Cases [Member] case	Jun. 30, 2009 Liggett [Member] Engle Progeny Cases [Member]	Oct. 31, 2013 Liggett [Member] Engle Progeny Cases [Member] Cases Settled without Litigation [Member] case	Sep. 30, 2014 Liggett [Member] Engle Progeny Cases [Member] Cases Settled without Litigation [Member] case	Sep. 30, 2014 Liggett [Member] Engle Progeny Cases [Member] Cases Settled without Litigation [Member] case	May 31, 2013 Liggett [Member] Engle Case Class Action [Member] plaintiff	May 31, 2003 Liggett [Member] Engle Case Class Action [Member] plaintiff	Jul. 31, 2000 Liggett [Member] Engle Case Class Action [Member]	Apr. 30, 2000 Liggett [Member] Engle Case Class Action [Member]	Sep. 30, 2014 Liggett [Member] Tullo v R J Reynolds [Member]	Sep. 30, 2014 Liggett [Member] Lukacs, Campbell, Douglas, Clay, Ward and Rizzuto [Member]	Sep. 30, 2014 Liggett Only Cases [Member] Individual Actions [Member] case	Sep. 30, 2014 Liggett Only Cases [Member] Engle Case Class Action [Member] case	Sep. 30, 2014 Liggett Only Cases [Member] Lambert v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Pending Litigation [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Engle Progeny Cases [Member] case	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Engle Progeny Cases [Member] case	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Engle Progency Cases Excluding Lukacs [Member] Minimum [Member] case	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Engle Progency Cases Excluding Lukacs [Member] Maximum [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Lukacs v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Campbell v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Douglas v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Clay v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Putney v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Tullo v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Ward v R J Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Calloway v RJ Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Calloway v RJ Reynolds [Member] Joint and Several Judgment [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Buchanan v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Buchanan v. R.J. Reynolds [Member] Joint and Several Judgment [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Cohen v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Rizzuto v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Irimi v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett [Member] Lambert v. R.J. Reynolds [Member]	Oct. 27, 2014 Subsequent Event [Member] Liggett Only Cases [Member] Rizzuto v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Percentage of Total Cigarettes Sold That Exceeds Market Share Exemption																											1.25%	1.645%
Legal expenses and other litigation costs												$ 7,282,000	$ 7,334,000																	$ 86,213,000
Bonds												5,093,000
Bond cap																																			200,000,000
Number of cases settled and dismissed																																4,900				4,900	0	144												19
Number of plaintiff verdicts																									30															1											13
Number of defense verdicts																																								2											6
Payments for legal settlements																																											272,000	20,040,000
Term case tried prior to final decision									12 years																																													7 years
Amount of litigation settlement								145,000,000,000																							110,000,000							1,170,000			790,000,000	12,704,000						28,804,000	10,826,000			1,000	3,600,000	12,418,000	156,000	1,350,000	349,000	3,008,000	225,000	1,000	1,947,000	16,100,000	2,035,000	5,500,000	205,000	3,479,000	31,000	3,600,000	1,500,000
Cases with punitive damages																																																				3
Cases pending					5	750								30	8	4	2	2	1	1	100	48	4	1	100	1					330														3	2
Damages awarded																																															13,100,000
Damages paid																																																(17,978,000)
Punitive damages																																																18,100,000	17,100,000								1,000,000				7,600,000							9,500,000
Punitive damages paid																																																(1,000,000)
Minimum loss exposure																													0
Maximum loss exposure																													27,926,000
Number of plaintiffs																																							3
Settlement consideration paid in lump sum																															61,600,000
Settlement consideration paid in equal monthly installments over next 15 years																															48,000,000
Settlement consideration installment payments term																															14 years
Litigation settlement and judgment expense	225,000	87,913,000	1,725,000	87,913,000																													86,213,000
Litigation settlement and judgement expense, amount discounted																															25,213,000
Discount rate																															11.00%
Expected payments yearly for 2014 through 2017																															3,500,000
Over turned judgment																																								5,831,000
Gain (loss) related to litigation settlement										6,947,000
Accrued expense for this matter											25,809,000																8,500,000
Claims scheduled for trial																																		16
Damages sought							$ 1,000,000
Number of defendants							3

XML

New Valley LLC (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended					0 Months Ended	3 Months Ended			9 Months Ended							3 Months Ended		9 Months Ended					9 Months Ended				3 Months Ended	9 Months Ended																				3 Months Ended		9 Months Ended									3 Months Ended	9 Months Ended													0 Months Ended	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 New Valley LLC [Member]	Dec. 31, 2013 New Valley LLC [Member]	Dec. 13, 2013 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Jun. 30, 2014 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Mar. 31, 2014 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Sep. 30, 2013 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Sep. 30, 2013 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Sep. 30, 2014 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Dec. 31, 2012 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Sep. 30, 2014 New Valley LLC [Member] Land Development [Member]	Dec. 31, 2013 New Valley LLC [Member] Land Development [Member]	Sep. 30, 2014 New Valley LLC [Member] Milanosesto Holdings (f/k/a Sesto Holdings) [Member]	Dec. 31, 2013 New Valley LLC [Member] Milanosesto Holdings (f/k/a Sesto Holdings) [Member]	Sep. 30, 2014 New Valley LLC [Member] Condominium and Mixed Use Development [Member]	Sep. 30, 2013 New Valley LLC [Member] Condominium and Mixed Use Development [Member]	Sep. 30, 2014 New Valley LLC [Member] Condominium and Mixed Use Development [Member]	Sep. 30, 2013 New Valley LLC [Member] Condominium and Mixed Use Development [Member]	Dec. 31, 2013 New Valley LLC [Member] Condominium and Mixed Use Development [Member]	Sep. 30, 2014 New Valley LLC [Member] Condominium and Mixed Use Development [Member] Minimum [Member]	Sep. 30, 2014 New Valley LLC [Member] Condominium and Mixed Use Development [Member] Maximum [Member]	Sep. 30, 2014 New Valley LLC [Member] 10 Madison Square Park West (f/k/a 1107 Broadway) [Member]	Dec. 31, 2013 New Valley LLC [Member] 10 Madison Square Park West (f/k/a 1107 Broadway) [Member]	Sep. 30, 2014 New Valley LLC [Member] The Whitman [Member]	Dec. 31, 2013 New Valley LLC [Member] The Whitman [Member]	Sep. 30, 2014 New Valley LLC [Member] The Marquand [Member]	Sep. 30, 2014 New Valley LLC [Member] The Marquand [Member]	Dec. 31, 2013 New Valley LLC [Member] The Marquand [Member]	Sep. 30, 2014 New Valley LLC [Member] Eleven Beach Street [Member]	Dec. 31, 2013 New Valley LLC [Member] Eleven Beach Street [Member]	Sep. 30, 2014 New Valley LLC [Member] 20 Times Square (f/k/a 701 Seventh Avenue) [Member]	Dec. 31, 2013 New Valley LLC [Member] 20 Times Square (f/k/a 701 Seventh Avenue) [Member]	Sep. 30, 2014 New Valley LLC [Member] 101 Murray Street [Member]	Dec. 31, 2013 New Valley LLC [Member] 101 Murray Street [Member]	Sep. 30, 2014 New Valley LLC [Member] 160 Leroy Street [Member]	Dec. 31, 2013 New Valley LLC [Member] 160 Leroy Street [Member]	Sep. 30, 2014 New Valley LLC [Member] PUBLIC Chrystie House (f/k/a Chrystie Street) [Member]	Dec. 31, 2013 New Valley LLC [Member] PUBLIC Chrystie House (f/k/a Chrystie Street) [Member]	Sep. 30, 2014 New Valley LLC [Member] 25-19 43rd Avenue [Member]	Dec. 31, 2013 New Valley LLC [Member] 25-19 43rd Avenue [Member]	Sep. 30, 2014 New Valley LLC [Member] Queens Plaza (f/k/a 23-10 Queens Plaza South) [Member]	Dec. 31, 2013 New Valley LLC [Member] Queens Plaza (f/k/a 23-10 Queens Plaza South) [Member]	Sep. 30, 2014 New Valley LLC [Member] 8701 Collins Avenue [Member]	Dec. 31, 2013 New Valley LLC [Member] 8701 Collins Avenue [Member]	Sep. 30, 2014 New Valley LLC [Member] 125 Greenwich Street [Member]	Dec. 31, 2013 New Valley LLC [Member] 125 Greenwich Street [Member]	Sep. 30, 2014 New Valley LLC [Member] Apartment Buildings [Member]	Sep. 30, 2013 New Valley LLC [Member] Apartment Buildings [Member]	Sep. 30, 2014 New Valley LLC [Member] Apartment Buildings [Member]	Sep. 30, 2013 New Valley LLC [Member] Apartment Buildings [Member]	Dec. 31, 2013 New Valley LLC [Member] Apartment Buildings [Member]	Sep. 30, 2014 New Valley LLC [Member] Apartment Buildings [Member] Minimum [Member]	Sep. 30, 2014 New Valley LLC [Member] Apartment Buildings [Member] Maximum [Member]	Sep. 30, 2014 New Valley LLC [Member] Maryland Portfolio [Member]	Dec. 31, 2013 New Valley LLC [Member] Maryland Portfolio [Member]	Sep. 30, 2014 New Valley LLC [Member] ST Portfolio [Member]	Dec. 31, 2013 New Valley LLC [Member] ST Portfolio [Member]	Sep. 30, 2014 New Valley LLC [Member] Hotels [Member]	Sep. 30, 2014 New Valley LLC [Member] Hotels [Member]	Dec. 31, 2013 New Valley LLC [Member] Hotels [Member]	Sep. 30, 2013 New Valley LLC [Member] Hotels [Member]	Sep. 30, 2014 New Valley LLC [Member] Hotels [Member] Minimum [Member]	Sep. 30, 2014 New Valley LLC [Member] Hotels [Member] Maximum [Member]	Sep. 30, 2014 New Valley LLC [Member] Park Lane Hotel [Member]	Dec. 31, 2013 New Valley LLC [Member] Park Lane Hotel [Member]	Sep. 30, 2014 New Valley LLC [Member] Hotel Taiwana [Member]	Dec. 31, 2013 New Valley LLC [Member] Hotel Taiwana [Member]	Sep. 30, 2014 New Valley LLC [Member] Coral Beach and Tennis Club [Member]	Dec. 31, 2013 New Valley LLC [Member] Coral Beach and Tennis Club [Member]	Sep. 30, 2014 New Valley LLC [Member] Other Investments [Member]	Dec. 31, 2013 New Valley LLC [Member] Other Investments [Member]	May 12, 2014 New Valley LLC [Member] Indian Creek [Member]	Sep. 30, 2014 New Valley LLC [Member] Indian Creek [Member]	Sep. 30, 2013 New Valley LLC [Member] Indian Creek [Member]
Schedule of Investments [Line Items]
Ownership percentage														50.00%										5.00%	49.50%																															7.50%	16.40%									5.00%	49.00%											80.00%
Percent of acquired interest in affiliate								20.59%
Ownership Percentage in Affiliate													70.59%
Goodwill adjustment										$ (454)
Current liabilities adjustment									16,434	(105)
Intangible assets adjustment										559
Investments in subsidiaries			0	0				60,000
Equity income from real estate ventures	3,258	9,489	3,002	16,774							9,075	16,513							5,090	526	7,389	656				2,254					5,000																				(87)	(111)	(251)	(394)								(2,053)	(4,224)
Percent of units sold																														40.00%
Distributions from non-consolidated real estate businesses			(5,540)	(2,463)								(2,961)									(7,791)	(2,593)																															(375)	(250)																						(7,100)
Investments in real estate ventures	154,281		154,281		128,202	154,281	128,202								5,037	5,037	5,037	5,037	100,786		100,786		71,358			6,384	6,579	526	1,165	12,000	12,000	7,000	12,328	11,160	12,481	11,148	25,269	19,256	1,353	1,150	3,180	2,048	733	0	12,590	8,058	4,634	3,794	9,308	0	18,856		18,856		19,482			3,348	3,498	15,508	15,984	27,655	27,655	29,906				18,097	19,514	6,850	7,428	2,708	2,964	1,947	2,419			7,616
Long-term investments accounted for under the equity method	13,977		13,977		8,595														27,154	23,984	27,154	23,984																																								1,973	1,973		21,992
Maximum exposure to loss as a result of this investment																			100,786		100,786																														18,856		18,856									27,655	27,655
Proceeds from sale of equity method investments																																																																												14,400
Operating income (loss)	$ 62,984	$ (37,285)	$ 166,014	$ 50,051																																																																									$ 2,400

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Summary of Significant Accounting Policies Schedule of revision of prior period gross revenues and costs (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Tobacco	$ 264,520	[1]	$ 271,516	[1]	$ 748,468	[1]	$ 761,038	[1]
Real estate	153,748		6,425		415,280		19,298
Total revenues	419,876		277,941		1,173,725		780,336
Tobacco	189,728	[1]	194,991	[1]	537,667	[1]	548,377	[1]
Real estate	96,442		5,844		261,531		16,080
Total cost of sales	287,236		200,835		805,555		564,457
Operating, selling, administrative and general expenses	69,431		26,478		200,431		77,915
As Previously Reported [Member]
Tobacco			0				0
Real estate			0				0
Total revenues			271,516				761,038
Tobacco			0				0
Real estate			0				0
Total cost of sales			194,991				548,377
Operating, selling, administrative and general expenses			25,897				74,697
Revision [Member]
Tobacco			271,516				761,038
Real estate			6,425				19,298
Total revenues			6,425				19,298
Tobacco			194,991				548,377
Real estate			5,844				16,080
Total cost of sales			5,844				16,080
Operating, selling, administrative and general expenses			581				3,218
Revenue [Member] | Revision [Member]
Revision			(271,516)				(761,038)
Cost of Sales [Member] | Revision [Member]
Revision			$ (194,991)				$ (548,377)

[1] Revenues and cost of sales include excise taxes of $115,323, $121,787, $327,434 and $343,294, respectively.

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Contingencies Litigation Accrual Rollforward (Details) (USD $) In Thousands, unless otherwise specified			9 Months Ended				9 Months Ended						9 Months Ended				9 Months Ended				9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Current Liabilities [Member]	Sep. 30, 2013 Current Liabilities [Member]	Sep. 30, 2014 Current Liabilities [Member]	Sep. 30, 2013 Current Liabilities [Member]	Sep. 30, 2014 Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2013 Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2014 Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2013 Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2014 Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2013 Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2014 Non-Current Liabilities [Member]	Sep. 30, 2013 Non-Current Liabilities [Member]	Sep. 30, 2014 Non-Current Liabilities [Member]	Sep. 30, 2013 Non-Current Liabilities [Member]	Sep. 30, 2014 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2013 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2014 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2013 Non-Current Liabilities [Member] Master Settlement Agreement [Member]	Sep. 30, 2014 Non-Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2013 Non-Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2014 Non-Current Liabilities [Member] Pending Litigation [Member]	Sep. 30, 2013 Non-Current Liabilities [Member] Pending Litigation [Member]
Loss Contingency Accrual [Roll Forward]
Payments due under Master Settlement Agreement, Current	$ 91,590	$ 25,348					$ 25,348	$ 32,970
Litigation Accruals, Current									59,310	1,470	3,307	63,201
Total, Current			84,658	34,440	94,897	148,072
Payments due under Master Settlement Agreement, Non-Current	25,809	27,571															27,571	52,639	25,809	35,630
Litigation Accruals, Non-Current	25,029	27,058																			27,058	1,862	25,029	27,008
Total, Non-Current													54,629	54,501	50,838	62,638
Expenses			85,200	150,642			83,159	87,770	2,041	62,872			0	25,219			0	0			0	25,219
NPM Settlement Adjustment			0	(5,987)			0	(5,987)	0	0			(1,419)	(13,489)			(1,419)	(13,489)			0	0
Change in MSA obligations capitalized as inventory			(917)	675			(917)	675	0	0			0	0			0	0			0	0
Payments			(78,165)	(35,762)			(16,343)	(34,077)	(61,822)	(1,685)			0	0			0	0			0	0
Reclassification to non-current liabilities			3,918	3,743			343	3,520	3,575	223			(3,918)	(3,743)			(343)	(3,520)			(3,575)	(223)
Interest on withholding			203	321			0	0	203	321			1,546	150			0	0			1,546	150
Payments due under Master Settlement Agreement, Current	$ 91,590	$ 25,348					$ 91,590	$ 84,871

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Long-Term Investments (Tables)

9 Months Ended

Sep. 30, 2014

Long-term Investments [Abstract]

Long-term investments

Long-term investments accounted for at cost:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	31,541	$	36,735	$	20,041	$	24,095
Real estate partnership	698		1,102		747		1,067
Investments accounted for at cost	$	32,239	$	37,837	$	20,788	$	25,162

Schedule of Equity Method Investments

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

	September 30, 2014		December 31, 2013
Investment partnership	$	13,977	$	8,595

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Notes Payable, Long-Term Debt and Other Obligations (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311	Dec. 31, 2013 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311	Sep. 30, 2014 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	Dec. 31, 2013 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	Sep. 30, 2014 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817	Dec. 31, 2013 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817	Sep. 30, 2014 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0	Dec. 31, 2013 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0	Sep. 30, 2014 Secured Debt 7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	Dec. 31, 2013 Secured Debt 7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	Feb. 28, 2013 Secured Debt 7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	Sep. 30, 2014 Convertible Debt 7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	Dec. 31, 2013 Convertible Debt 7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	Sep. 30, 2014 Convertible Debt 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311	Mar. 14, 2014 Convertible Debt 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311	Dec. 31, 2013 Convertible Debt 6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311	Sep. 30, 2014 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	Aug. 31, 2014 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	May 20, 2014 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	Dec. 31, 2013 Convertible Debt 6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944	Sep. 30, 2014 Convertible Debt 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817	Dec. 31, 2013 Convertible Debt 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817	Sep. 30, 2014 Convertible Debt 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0	Mar. 24, 2014 Convertible Debt 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0	Dec. 31, 2013 Convertible Debt 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0	Sep. 30, 2014 Line of Credit Revolving credit facility Liggett [Member]	Dec. 31, 2013 Line of Credit Revolving credit facility Liggett [Member]	Sep. 30, 2014 Line of Credit Term loan under credit facility Liggett [Member]	Dec. 31, 2013 Line of Credit Term loan under credit facility Liggett [Member]	Sep. 30, 2014 Equipment loans Liggett [Member]	Dec. 31, 2013 Equipment loans Liggett [Member]	Sep. 30, 2014 Other Liggett [Member]	Dec. 31, 2013 Other Liggett [Member]
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations	$ 958,265	$ 692,343									$ 609,577	$ 450,000				$ 23,267	$ 25,000	$ 30,689	$ 64,902	$ 67,615		$ 81,586	$ 80,658	$ 74,183	$ 157,083		$ 0	$ 2,452	$ 30,424	$ 3,663	$ 3,884	$ 16,128	$ 17,252	$ 535	$ 4,325
Less: Current maturities	(101,158)	(151,577)
Amount due after one year	857,107	540,766
Interest rate													7.75%			6.75%	6.75%		6.75%	6.75%	6.75%		7.50%		5.50%	5.50%
Fair value of the derivatives embedded	180,474	92,934	885	6,607	2,110	12,521	94,247	92,934	86,228	0
Premium														9,577	0
Unamortized discount																$ 1,733		$ 19,311	$ 2,713			$ 25,944	$ 101,667	$ 0	$ 149,342		$ 155,817

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Investment Securities Available for Sale (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 246,167	$ 106,649
Gross Unrealized Gains	90,529	67,348
Gross Unrealized Losses	(2,813)	(1,463)
Fair Value	333,883	172,534
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Cost	56,098	53,586
Gross Unrealized Gains	88,913	65,851
Gross Unrealized Losses	(1,047)	(963)
Fair Value	143,964	118,474
Mutual funds invested in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Cost	60,637
Gross Unrealized Gains	0
Gross Unrealized Losses	(586)
Fair Value	60,051
Marketable debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost	129,432	53,063
Gross Unrealized Gains	1,616	1,497
Gross Unrealized Losses	(1,180)	(500)
Fair Value	$ 129,868	$ 54,060

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Summary of Significant Accounting Policies Antidilutive Securities Excluded from Earnings Per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
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)		524,887		524,887
Weighted-average exercise price (in dollars per share)		$ 11.88		$ 11.88
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)		55,125		55,125
Weighted-average expense per share (dollars per share)		$ 15.52		$ 15.52
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)	32,599,702	29,726,047	31,257,300	29,726,047
Weighted-average conversion price (dollars per share)	$ 18.36	$ 14.50	$ 17.30	$ 14.50

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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		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Debt Instrument [Line Items]
Amortization of debt discount	$ 14,277	$ 9,620	$ 41,180	$ 25,432
Amortization of deferred finance costs	1,147	549	2,910	1,593
Loss on extinguishment of 11% Senior Secured Notes	0	0	0	3,638
Non-cash Interest Expense	16,418	10,169	49,202	30,663
Convertible Debt [Member] | 6.75% Variable Interest Senior Convertible Note due 2014 - Vector
Debt Instrument [Line Items]
Acceleration of interest expense	0	0	3,679	0
Convertible Debt [Member] | 6.75% Variable Interest Senior Convertible Exchange Notes due 2014
Debt Instrument [Line Items]
Acceleration of interest expense	$ 994	$ 0	$ 1,433	$ 0

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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	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	$ 2,638	$ 1,935
Fair value of derivatives embedded within convertible debt	183,470	112,062
Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	2,638	1,935
Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair value of derivatives embedded within convertible debt	$ 183,470	$ 112,062
Warrants (1) | Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 4.24	$ 3.13
Exercise price (dollars per share)	$ 1.68	$ 1.68
Term (in years)	2 years 1 month 6 days	2 years 9 months 18 days
Volatility	44.76%	53.82%
Dividend rate	0.00%	0.00%
Risk-free return	0.70%	0.72%
Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 22.18	$ 16.37
Volatility	16.00%	18.00%
Assumed annual stock dividend	5.00%	5.00%
Assumed annual cash dividend (dollars per share)	$ 1.60	$ 1.60
Convertible trading price	111.63%	118.70%
Implied credit spread	5.50%	8.00%
Minimum [Member] | Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Implied credit spread	5.00%	7.50%
Maximum [Member] | Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Implied credit spread	6.00%	8.50%

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New Valley LLC Summarized Financial Information (Details) (Douglas Elliman Realty LLC [Member], New Valley LLC [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Douglas Elliman Realty LLC [Member] | New Valley LLC [Member]
Investment Holdings [Line Items]
Revenues	$ 127,537	$ 315,721
Costs and expenses	109,178	282,885
Depreciation expense	986	2,944
Amortization expense	56	167
Other income	(109)	(512)
Interest income, net	(14)	(22)
Income tax expense	442	684
Net income	$ 16,998	$ 29,575

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Cash Flows [Abstract]
Net cash provided by operating activities	$ 100,044	$ 55,244
Cash flows from investing activities:
Sale of investment securities	174,253	82,649
Purchase of investment securities	(312,919)	(129,483)
Proceeds from sale or liquidation of long-term investments	549	75
Purchase of long-term investments	(12,000)	(5,000)
Investments in real estate ventures	(29,378)	(45,977)
Investments in consolidated real estate businesses	0	(7,697)
Distributions from real estate ventures	5,540	2,463
Increase in cash surrender value of life insurance policies	(435)	(470)
Increase in restricted assets	(1,108)	(553)
Issuance of notes receivable	(250)	0
Proceeds from sale of fixed assets	4	11
Capital expenditures	(20,746)	(8,686)
Repayments of notes receivable	933	9,460
Purchase of subsidiaries	(250)	0
Net cash used in investing activities	(195,807)	(103,208)
Cash flows from financing activities:
Proceeds from debt issuance	413,918	454,200
Financing costs	(12,360)	(11,750)
Repayments of debt	(10,305)	(420,710)
Borrowings under revolver	645,894	723,578
Repayments on revolver	(673,866)	(736,007)
Dividends and distributions on common stock	(122,051)	(107,302)
Distributions to non-controlling interest	(4,861)	0
Proceeds from exercise of Vector options	4,407	528
Tax benefit of options exercised	937	33
Net cash provided by (used in) financing activities	241,713	(97,430)
Net increase (decrease) in cash and cash equivalents	145,950	(145,394)
Cash and cash equivalents, beginning of period	234,466	405,855
Cash and cash equivalents, end of period	$ 380,416	$ 260,461

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenues	$ 419,876	$ 277,941	$ 1,173,725	$ 780,336
Operating income (loss)	62,984	(37,285)	166,014	50,051
Equity income from real estate ventures	3,258	9,489	3,002	16,774
Identifiable assets	1,643,383	1,120,955	1,643,383	1,120,955	1,260,264
Depreciation and amortization	6,045	2,772	18,599	8,005
Capital expenditures			20,746	8,686
Litigation settlement and judgment expense	225	87,913	1,725	87,913
Tobacco [Member]
Segment Reporting Information [Line Items]
Revenues	264,520	271,516	748,468	761,038
Operating income (loss)	52,993	(32,414)	147,395	63,040
Equity income from real estate ventures	0	0	0	0
Identifiable assets	445,914	425,186	445,914	425,186
Depreciation and amortization	2,853	2,361	7,934	7,114
Capital expenditures			7,911	5,813
E-Cigarettes [Member]
Segment Reporting Information [Line Items]
Revenues	1,608	0	9,977	0
Operating income (loss)	(2,910)	(560)	(7,100)	(560)
Equity income from real estate ventures	0	0	0	0
Identifiable assets	10,657	3,834	10,657	3,834
Depreciation and amortization	0	0	0	0
Capital expenditures			0	0
Real Estate [Member]
Segment Reporting Information [Line Items]
Revenues	153,748	6,425	415,280	19,298
Operating income (loss)	16,222	(806)	36,867	(1,423)
Equity income from real estate ventures	3,258	9,489	3,002	16,774
Identifiable assets	483,330	208,339	483,330	208,339
Depreciation and amortization	2,740	160	9,709	440
Capital expenditures			5,614	553
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenues	0	0	0	0
Operating income (loss)	(3,321)	(3,505)	(11,148)	(11,006)
Equity income from real estate ventures	0	0	0	0
Identifiable assets	703,482	483,596	703,482	483,596
Depreciation and amortization	452	251	956	451
Capital expenditures			7,221	2,320
NPM Settlement [Member]
Segment Reporting Information [Line Items]
Gain related to litigation settlement		1,419	4,016	(10,963)
Litigation Settlement Charge [Member]
Segment Reporting Information [Line Items]
Litigation settlement and judgment expense			86,213	86,213
Litigation Judgment Expense [Member]
Segment Reporting Information [Line Items]
Litigation settlement and judgment expense	$ 225	$ 1,725	$ 1,700	$ 1,700

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Investment Securities Available for Sale (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value	$ 333,883	$ 172,534
U.S. Government securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	0
1 Year up to 5 Years	44,220
More than 5 Years	0
Fair Value	44,220
Corporate securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	3,480
1 Year up to 5 Years	40,031
More than 5 Years	7,402
Fair Value	50,913
U.S. mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	0
1 Year up to 5 Years	297
More than 5 Years	0
Fair Value	297
Commercial mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	2,261
1 Year up to 5 Years	13,300
More than 5 Years	0
Fair Value	15,561
U.S. asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	3,980
1 Year up to 5 Years	10,691
More than 5 Years	0
Fair Value	14,671
Government agencies
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	731
1 Year up to 5 Years	2,169
More than 5 Years	0
Fair Value	2,900
Index-linked U.S. bonds
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	0
1 Year up to 5 Years	1,306
More than 5 Years	0
Fair Value	1,306
Marketable debt securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	10,452
1 Year up to 5 Years	112,014
More than 5 Years	7,402
Fair Value	$ 129,868	$ 54,060

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income tax expense (benefit)

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014		2013
Income (loss) before provision for income taxes	$	31,669		$	(55,860	)	$	57,272	$	(34,348	)
Income tax expense using estimated annual effective income tax rate	9,932			(22,763		)	17,962		(13,997		)
Changes in effective tax rates	(374		)	1,181			—		1,159
Increase in unrecognized tax benefits	—			251			—		373
Impact of discrete items, net	1,305			—			1,944		816
Impact of discrete item associated with litigation settlement	—			2,362			—		2,362
Inclusion of tax liabilities from unincorporated entities	1,101			—			1,101		—
Income tax expense (benefit)	$	11,964		$	(18,969	)	$	21,007	$	(9,287	)

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Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [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 September 30, 2014:

State	Number of Cases
Florida	30
New York	8
Maryland	4
Louisiana	2
West Virginia	2
Missouri	1
Ohio	1

Schedule of Judgments Entered

As of October 27, 2014, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages	Liggett Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Liggett satisfied the judgment and the case is concluded.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	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 which was denied. Both sides sought discretionary review from the Florida Supreme Court. The appeal is stayed pending the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	Affirmed by the Fourth District Court of Appeal. Discretionary review from the Florida Supreme Court was denied. Liggett satisfied the judgment and the case is concluded, other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	Liggett satisfied the merits judgment and other than an issue regarding attorneys' fees, the case is concluded.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. 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. Affirmed by the First District Court of Appeal, but, the court certified an issue of conflict with another case. The defendants sought discretionary review by the Florida Supreme Court. The appeal is stayed pending the outcome of Hess.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	$3,479	None	Liggett settled its portion of the judgment for $1,500 and the case is concluded.
August 2014	Irimi v. R.J. Reynolds	Broward	$31	None	The verdict has not been reduced to a judgment. Post trial motions are pending.
October 2014	Lambert v. R.J. Reynolds	Pinellas	$3,600	$9,500	The verdict has not been reduced to a judgment. Post trial motions are pending.
Total Damages Awarded:			$28,804	$18,100
Amounts paid or compromised:			$(17,978)	$(1,000)
Damages remaining on Appeal:			$10,826	$17,100

Schedule of Loss Contingencies

The activity in the Company's accruals for the MSA and tobacco litigation for the nine months ended September 30, 2014 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, 2014	$	25,348		$	59,310		$	84,658		$	27,571		$	27,058		$	54,629
Expenses	83,159			2,041			85,200			—			—			—
NPM Settlement adjustment	—			—			—			(1,419		)	—			(1,419		)
Change in MSA obligations capitalized as inventory	(917		)	—			(917		)	—			—			—
Payments	(16,343		)	(61,822		)	(78,165		)	—			—			—
Reclassification from non-current liabilities	343			3,575			3,918			(343		)	(3,575		)	(3,918		)
Interest on withholding	—			203			203			—			1,546			1,546
Balance as of September 30, 2014	$	91,590		$	3,307		$	94,897		$	25,809		$	25,029		$	50,838

The activity in the Company's accruals for the MSA and tobacco litigation for the nine months ended September 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	87,770			62,872			150,642			—			25,219			25,219
NPM Settlement adjustment	(5,987		)	—			(5,987		)	(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	675			—			675			—			—			—
Payments	(34,077		)	(1,685		)	(35,762		)	—			—			—
Reclassification from non-current liabilities	3,520			223			3,743			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			321			321			—			150			150
Balance as of September 30, 2013	$	84,871		$	63,201		$	148,072		$	35,630		$	27,008		$	62,638

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Contingencies MSA and Other State Settlement Agreements (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended		9 Months Ended	1 Months Ended		1 Months Ended	25 Months Ended			9 Months Ended		12 Months Ended	78 Months Ended				9 Months Ended									12 Months Ended			1 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Liggett and Vector Tobacco [Member]	Sep. 30, 2014 Liggett Vector Brands [Member]	Sep. 30, 2014 Putney, Tullo, Calloway, Buchanan, Cohen and Rizzuto [Member] Liggett [Member]	Sep. 30, 2014 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]	Dec. 31, 2013 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett and Vector Tobacco [Member]	Sep. 30, 2014 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] state	Mar. 31, 1998 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett [Member] state	Sep. 30, 2014 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Liggett [Member]	Sep. 30, 2014 Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member] Vector Tobacco [Member]	Sep. 30, 2014 Master Settlement Agreement [Member]	Nov. 30, 1998 Master Settlement Agreement [Member] Liggett [Member] state	Dec. 31, 2003 NPM Adjustment [Member] state	Sep. 30, 2012 NPM Adjustment [Member] state	Sep. 30, 2014 NPM Adjustment [Member] state	Dec. 17, 2012 NPM Adjustment [Member] state	Nov. 30, 2011 NPM Adjustment [Member] state	Sep. 30, 2013 NPM Adjustment [Member] Liggett and Vector Tobacco [Member]	Sep. 30, 2014 NPM Adjustment [Member] Liggett and Vector Tobacco [Member]	Apr. 15, 2014 NPM Adjustment [Member] Liggett and Vector Tobacco [Member]	Sep. 30, 2014 NPM Adjustment [Member] Liggett [Member]	Apr. 30, 2014 NPM Adjustment [Member] Liggett [Member]	Apr. 15, 2014 NPM Adjustment [Member] Liggett [Member]	Apr. 02, 2014 NPM Adjustment [Member] Liggett [Member]	Dec. 31, 2013 NPM Adjustment [Member] Liggett [Member]	Sep. 30, 2014 Gross Versus Net Dispute [Member] Liggett [Member]	Dec. 31, 2003 Minnesota Settlement [Member] Liggett [Member]	Dec. 31, 2011 Florida Settlement [Member] Liggett [Member]	Sep. 30, 2014 Florida Settlement [Member] Liggett [Member] year	Feb. 29, 2012 Mississippi Settlement [Member] Liggett [Member]	Sep. 30, 2014 Minimum [Member] Florida Settlement [Member] Liggett [Member] year	Sep. 30, 2014 Maximum [Member] Master Settlement Agreement [Member] sponsorship	Dec. 31, 2013 Maximum [Member] Gross Versus Net Dispute [Member] Liggett [Member]	Sep. 30, 2014 Maximum [Member] Florida Settlement [Member] Liggett [Member] year
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																							$ 100,000	$ 250,000
MSA payment obligations													0	0
Percentage of Total Cigarettes Sold That Exceeds Market Share Exemption													1.65%	0.28%																1.25%							1.645%
Total cigarettes sold					3.30%
Settlement payment									(95,000,000)																							(1,200,000)
Settlement Accruals										16,300,000
Aggregate number of settling states																		49
Amounts not expensed by the Company																	1,200,000,000
Courts that did not rule																	1
Courts that decided the issue																	48
Settling states																	45
Allocable share of settling states																	90.00%
Reduction of any Potential 2003 NPM Adjustment																	20.00%
Number of settling states with diligent enforcement not contested																				20	16
Non-settling states																			15
Non-settling states that did not diligently enforce escrow statutes																			6
Settlement adjustment credit																								1,733,000	1,400,000	521,000	5,152,000	6,441,000	5,987,000
Loss Contingency, Settlement Adjustment Credit, Disputed Entitled Amount																											1,315,000
Gain (loss) related to litigation settlement																						6,947,000
Accrued expense for this matter																							25,809,000							8,500,000
Amount remaining in disputed payment accounts																							24,400,000
Maximum loss exposure						500,000	27,926,000
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
Term of notice from state																																		60 days
Letter of credit						100,000
Agreed additional amount funded						400,000
Litigation settlement and judgment expense	225,000	87,913,000	1,725,000	87,913,000		83,000
Agreed additional amount funded adjusted						$ 317,000

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Long-Term Investments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	$ 32,239	$ 20,788
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	32,239	20,788
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	37,837	25,162
Real estate partnership [Member] | Carrying Value [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	698	747
Real estate partnership [Member] | Fair Value [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	1,102	1,067
Investment partnerships [Member] | Carrying Value [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments accounted for at cost	31,541	20,041
Investment partnerships [Member] | Fair Value [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	$ 36,735	$ 24,095

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Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

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 September 30, 2014
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	$	220,197	$	220,197	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	5,093		5,093		—		—
Investment securities available for sale							—
Equity securities	143,964		143,403		561		—
Mutual funds invested in fixed income securities	60,051		60,051		—		—
Fixed income securities
U.S. Government securities	44,220		—		44,220		—
Corporate securities	50,913		6,525		44,388		—
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		—		15,561		—
U.S. asset backed securities	14,671		—		14,671		—
U.S. Government agencies	2,900		—		2,900		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total fixed income securities	129,868		6,525		123,343		—
Warrants (1)	2,638		—		—		2,638
Total	$	565,273	$	435,269	$	127,366	$	2,638
Liabilities:
Fair value of derivatives embedded within convertible debt	$	183,470	$	—	$	—	$	183,470

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,638 as of September 30, 2014 and are included in "Other assets". The Company recognized income of $868 for the nine months ended September 30, 2014 related to the change in fair value of the Warrants.

	Fair Value Measurements as of December 31, 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	$	130,733	$	130,733	$	—	$	—
Certificates of deposit	2,961		—		2,961		—
Bonds	5,337		5,337		—		—
Investment securities available for sale							—
Equity securities	118,474		117,737		737		—
Fixed income securities							—
U.S. Government securities	13,990		—		13,990		—
Corporate securities	29,923		6,497		23,426		—
U.S. mortgage backed securities	495		—		495		—
Commercial mortgage-backed securities	6,822		—		6,822		—
U.S. asset backed securities	2,081		—		2,081		—
Index-linked U.S. bonds	749		—		749		—
Total fixed income securities	54,060		6,497		47,563		—
Warrants (1)	1,935		—		—		1,935
Total	$	313,500	$	260,304	$	51,261	$	1,935
Liabilities:
Fair value of derivatives embedded within convertible debt	$	112,062	$	—	$	—	$	112,062

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $1,758 as of December 31, 2013 and are included in "Other assets". The Company recognized income of $172 for the nine months ended September 30, 2013 related to the change in fair value of the Warrants.

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 September 30, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,638	Option model	Stock price	$	4.24
				Exercise price	$	1.68
				Term (in years)	2.1
				Volatility	44.76		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	183,470	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.18
				Convertible trading price	111.63		%
				Volatility	16		%
				Implied credit spread	5.0% - 6.0% (5.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	1,935	Option model	Stock price	$	3.13
				Exercise price	$	1.68
				Term (in years)	2.8
				Volatility	53.82		%
				Dividend rate	—
				Risk-free return	0.72		%
Fair value of derivatives embedded within convertible debt	$	112,062	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.37
				Convertible trading price	118.70		%
				Volatility	18		%
				Implied credit spread	7.5% - 8.5% (8.0%)

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2014

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 nine months ended September 30, 2014 and 2013 follows:

								Real			Corporate
	Tobacco				E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2014
Revenues	$	264,520			$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993			(1)	(2,910		)	16,222			(3,321		)	62,984
Equity income from real estate ventures	—				—			3,258			—			3,258
Depreciation and amortization	2,853				—			2,740			452			6,045
Three months ended September 30, 2013
Revenues	$	271,516			$	—		$	6,425		$	—		$	277,941
Operating loss	(32,414		)	(2)	(560		)	(806		)	(3,505		)	(37,285		)
Equity income from real estate ventures	—				—			9,489			—			9,489
Depreciation and amortization	2,361				—			160			251			2,772
Nine months ended September 30, 2014
Revenues	$	748,468			$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395			(3)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—				—			3,002			—			3,002
Identifiable assets	445,914				10,657			483,330			703,482			1,643,383
Depreciation and amortization	7,934				—			9,709			956			18,599
Capital expenditures	7,911				—			5,614			7,221			20,746
Nine months ended September 30, 2013
Revenues	$	761,038			$	—		$	19,298		$	—		$	780,336
Operating income (loss)	63,040			(4)	(560		)	(1,423		)	(11,006		)	50,051
Equity income from real estate ventures	—				—			16,774			—			16,774
Identifiable assets	425,186				3,834			208,339			483,596			1,120,955
Depreciation and amortization	7,114				—			440			451			8,005
Capital expenditures	5,813				—			553			2,320			8,686

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Condensed Consolidated Statements of Stockholders' Deficiency (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
Beneficial conversion feature of notes payable, tax	$ 10,327
Tax on note conversions	$ 1,006

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Condensed Consolidating Financial Information (Tables)

9 Months Ended

Sep. 30, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2014
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	257,309		$	19,498	$	103,609	$	—		$	380,416
Investment securities available for sale	274,249			59,634		—		—			333,883
Accounts receivable - trade, net	—			11,231		2,376		—			13,607
Intercompany receivables	472			158		—		(630		)	—
Inventories	—			100,874		—		—			100,874
Deferred income taxes	21,497			4,043		—		—			25,540
Income taxes receivable, net	23,429			—		—		(8,617		)	14,812
Restricted assets	—			1,366		1,414		—			2,780
Other current assets	478			12,676		21,072		—			34,226
Total current assets	577,434			209,480		128,471		(9,247		)	906,138
Property, plant and equipment, net	2,896			62,940		20,786		—			86,622
Real estate held for sale, net	—			—		10,643		—			10,643
Long-term investments accounted for at cost	31,541			—		698		—			32,239
Long-term investments accounted for under the equity method	13,977			—		—		—			13,977
Investments in real estate ventures	—			—		154,281		—			154,281
Investments in consolidated subsidiaries	478,744			—		—		(478,744		)	—
Restricted assets	1,707			10,356		—		—			12,063
Deferred income taxes	56,586			8,174		5,556		—			70,316
Goodwill, trademarks and other intangible assets, net	—			107,511		160,630		—			268,141
Prepaid pension costs	—			28,165		—		—			28,165
Other assets	47,873			10,595		2,330		—			60,798
Total assets	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	88,169		$	12,781	$	208	$	—		$	101,158
Current portion of fair value of derivatives embedded within convertible debt	2,996			—		—		—			2,996
Current portion of employee benefits	—			939		—		—			939
Accounts payable	902			4,778		5,165		—			10,845
Intercompany payables	—			—		630		(630		)	—
Accrued promotional expenses	—			20,010		—		—			20,010
Income taxes payable, net	—			11,791		—		(8,617		)	3,174
Accrued excise and payroll taxes payable, net	—			861		—		—			861
Litigation accruals and current payments due under the Master Settlement Agreement	—			94,897		—		—			94,897
Deferred income taxes	44,164			13,599		—		—			57,763
Accrued interest	17,721			—		—		—			17,721
Other current liabilities	5,131			9,232		19,893		—			34,256
Total current liabilities	159,083			168,888		25,896		(9,247		)	344,620
Notes payable, long-term debt and other obligations, less current portion	847,318			9,517		272		—			857,107
Fair value of derivatives embedded within convertible debt	180,474			—		—		—			180,474
Non-current employee benefits	32,562			16,046		—		—			48,608
Deferred income taxes	80,046			39,867		45,813		—			165,726
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,265			51,133		2,317		—			54,715
Total liabilities	1,300,748			285,451		74,298		(9,247		)	1,651,250
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(89,990		)	151,770		326,974		(478,744		)	(89,990		)
Non-controlling interest	—			—		82,123		—			82,123
Total stockholders' (deficiency) equity	(89,990		)	151,770		409,097		(478,744		)	(7,867		)
Total liabilities and stockholders' deficiency	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	151,342		$	11,812	$	71,312	$	—		$	234,466
Investment securities available for sale	114,886			57,648		—		—			172,534
Accounts receivable - trade, net	—			10,154		2,005		—			12,159
Intercompany receivables	509			—		—		(509		)	—
Inventories	—			93,496		—		—			93,496
Deferred income taxes	45,578			4,901		—		—			50,479
Income taxes receivable, net	—			10,447		—		(10,447		)	—
Restricted assets	—			1,060		725		—			1,785
Other current assets	513			12,579		10,300		—			23,392
Total current assets	312,828			202,097		84,342		(10,956		)	588,311
Property, plant and equipment, net	3,641			55,093		20,524		—			79,258
Real estate held for sale, net	—			—		20,911		—			20,911
Long-term investments accounted for at cost	20,041			—		747		—			20,788
Long-term investments accounted for under the equity method	8,595			—		—		—			8,595
Investments in real estate ventures	—			—		128,202		—			128,202
Investments in consolidated subsidiaries	410,442			—		—		(410,442		)	—
Restricted assets	1,895			10,086		—		—			11,981
Deferred income taxes	35,000			12,766		3,708		—			51,474
Goodwill, trademarks and other intangible assets, net	—			107,511		163,600		—			271,111
Prepaid pension costs	—			26,080		—		—			26,080
Other assets	38,374			10,126		5,053		—			53,553
Total assets	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	112,275		$	39,013	$	289	$	—		$	151,577
Current portion of fair value of derivatives embedded within convertible debt	19,128			—		—		—			19,128
Current portion of employee benefits	—			939		—		—			939
Accounts payable	1,509			4,136		4,615		—			10,260
Intercompany payables	—			39		470		(509		)	—
Accrued promotional expenses	—			18,655		—		—			18,655
Income taxes payable, net	16,870			—		—		(10,447		)	6,423
Accrued excise and payroll taxes payable, net	—			11,621		—		—			11,621
Litigation accruals and current payments due under the Master Settlement Agreement	—			84,658		—		—			84,658
Deferred income taxes	32,309			13,425		—		—			45,734
Accrued interest	21,968			—		—		—			21,968
Other current liabilities	6,103			10,495		17,549		—			34,147
Total current liabilities	210,162			182,981		22,923		(10,956		)	405,110
Notes payable, long-term debt and other obligations, less current portion	524,182			12,573		4,011		—			540,766
Fair value of derivatives embedded within convertible debt	92,934			—		—		—			92,934
Non-current employee benefits	31,462			16,455		—		—			47,917
Deferred income taxes	65,759			37,602		34,289		—			137,650
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,353			54,924		1,219		—			57,496
Total liabilities	925,852			304,535		62,442		(10,956		)	1,281,873
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(95,036		)	119,224		291,218		(410,442		)	(95,036		)
Non-controlling interest	—			—		73,427		—			73,427
Total stockholders' (deficiency) equity	(95,036		)	119,224		364,645		(410,442		)	(21,609		)
Total liabilities and stockholders' deficiency	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264

Schedule of Condensed Income Statement

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	266,328		$	153,748		$	(200	)	$	419,876
Expenses:
Cost of sales	—			190,794			96,442			—			287,236
Operating, selling, administrative and general expenses	6,099			22,395			41,137			(200		)	69,431
Litigation settlement and judgment expense	—			225			—			—			225
Management fee expense	—			2,467			—			(2,467		)	—
Operating (loss) income	(6,099		)	50,447			16,169			2,467			62,984
Other income (expenses):
Interest expense	(43,005		)	(1,026		)	(3		)	—			(44,034		)
Change in fair value of derivatives embedded within convertible debt	7,127			—			—			—			7,127
Acceleration of interest expense related to debt conversion	(994		)	—			—			—			(994		)
Equity income from real estate ventures	—			—			3,258			—			3,258
Equity income on long-term investments	829			—			—			—			829
Gain on sale of investment securities available for sale	33			—			—			—			33
Equity income in consolidated subsidiaries	36,428			—			—			(36,428		)	—
Management fee income	2,467			—			—			(2,467		)	—
Other, net	1,936			296			234			—			2,466
Income (loss) before provision for income taxes	(1,278		)	49,717			19,658			(36,428		)	31,669
Income tax benefit (expense)	16,157			(21,491		)	(6,630		)	—			(11,964		)
Net income	14,879			28,226			13,028			(36,428		)	19,705
Net income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Net income attributed to Vector Group Ltd.	14,879			28,226			8,202			(36,428		)	14,879
Comprehensive income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Comprehensive income attributed to Vector Group	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	271,516		$	6,425		$	—		$	277,941
Expenses:
Cost of sales	—			194,991			5,844			—			200,835
Operating, selling, administrative and general expenses	4,968			19,990			1,520			—			26,478
Litigation judgment expense	—			87,913			—			—			87,913
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(4,968		)	(33,755		)	(939		)	2,377			(37,285		)
Other income (expenses):
Interest expense	(32,978		)	(602		)	(3		)	—			(33,583		)
Change in fair value of derivatives embedded within convertible debt	2,800			—			—			—			2,800
Equity income from real estate ventures	—			—			9,489			—			9,489
Equity loss on long-term investments	(53		)	—			—			—			(53		)
Loss on sale of investment securities available for sale	(99		)	—			—			—			(99		)
Equity loss in consolidated subsidiaries	(11,514		)	—			—			11,514			—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	603			2,270			(2		)	—			2,871
(Loss) income before provision for income taxes	(43,832		)	(32,087		)	8,545			11,514			(55,860		)
Income tax benefit (expense)	6,941			15,521			(3,493		)	—			18,969
Net (loss) income	(36,891		)	(16,566		)	5,052			11,514			(36,891		)
Comprehensive (loss) income	$	(28,536	)	$	(11,923	)	$	5,052		$	6,871		$	(28,536	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	758,645		$	415,280		$	(200	)	$	1,173,725
Expenses:
Cost of sales	—			544,024			261,531			—			805,555
Operating, selling, administrative and general expenses	17,315			66,270			117,046			(200		)	200,431
Litigation settlement and judgment expense	—			1,725			—			—			1,725
Management fee expense	—			7,402			—			(7,402		)	—
Operating (loss) income	(17,315		)	139,224			36,703			7,402			166,014
Other income (expenses):
Interest expense	(120,977		)	(3,265		)	(40		)	612			(123,670		)
Change in fair value of derivatives embedded within convertible debt	7,447			—			—			—			7,447
Acceleration of interest expense related to debt conversion	(5,112		)	—			—			—			(5,112		)
Equity income from real estate ventures	—			—			3,002			—			3,002
Equity income on long-term investments	1,462			—			—			—			1,462
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income in consolidated subsidiaries	96,554			—			—			(96,554		)	—
Management fee income	7,402			—			—			(7,402		)	—
Other, net	3,702			780			4,297			(612		)	8,167
(Loss) income before provision for income taxes	(26,875		)	136,739			43,962			(96,554		)	57,272
Income tax benefit (expense)	52,259			(57,846		)	(15,420		)	—			(21,007		)
Net income	25,384			78,893			28,542			(96,554		)	36,265
Net income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Net income attributed to Vector Group Ltd.	25,384			78,893			17,661			(96,554		)	25,384
Comprehensive income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Comprehensive income attributed to Vector Group Ltd.	$	41,218		$	79,026		$	17,661		$	(96,687	)	$	41,218

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2013
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	761,038		$	19,298		$	—		$	780,336
Expenses:
Cost of sales	—			548,377			16,080			—			564,457
Operating, selling, administrative and general expenses	16,350			56,939			4,626			—			77,915
Litigation judgment expense	—			87,913									87,913
Management fee expense	—			7,131			—			(7,131		)	—
Operating (loss) income	(16,350		)	60,678			(1,408		)	7,131			50,051
Other income (expenses):
Interest expense	(97,661		)	(1,374		)	(10		)	—			(99,045		)
Change in fair value of derivatives embedded within convertible debt	8,299			—			—			—			8,299
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from real estate ventures	—			—			16,774			—			16,774
(Loss) gain on sale of investment securities available for sale	(296		)	5,406			—			—			5,110
Equity income on long-term investments	770			—			—			—			770
Equity income in consolidated subsidiaries	52,051			—			—			(52,051		)	—
Management fee income	7,131			—			—			(7,131		)	—
Other, net	2,550			2,475			126			—			5,151
(Loss) income before provision for income taxes	(64,964		)	67,185			15,482			(52,051		)	(34,348		)
Income tax benefit (expense)	39,903			(24,270		)	(6,346		)	—			9,287
Net (loss) income	(25,061		)	42,915			9,136			(52,051		)	(25,061		)
Comprehensive (loss) income	$	(9,670	)	$	49,701		$	9,136		$	(58,837	)	$	(9,670	)

Schedule of Condensed Cash Flow Statement

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	23,189		$	98,319		$	53,475		$	(74,939	)	$	100,044
Cash flows from investing activities:
Sale of investment securities	174,253			—			—			—			174,253
Purchase of investment securities	(310,934		)	(1,985		)	—			—			(312,919		)
Proceeds from sale or liquidation of long-term investments	500			—			49			—			549
Purchase of long-term investments	(12,000		)	—			—			—			(12,000		)
Investments in real estate ventures	—			—			(29,378		)	—			(29,378		)
Purchase of subsidiaries	—			—			(250		)	—			(250		)
Distributions from real estate ventures	—			—			5,540			—			5,540
Increase in cash surrender value of life insurance policies	—			(435		)	—			—			(435		)
Decrease (increase) in restricted assets	188			(607		)	(689		)	—			(1,108		)
Issuance of notes receivable	(35,000		)	—			(250		)	35,000			(250		)
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Proceeds from sale of fixed assets	—			4			—			—			4
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from debt issuance	408,750			40,168			—			(35,000		)	413,918
Financing costs	(12,360		)	—			—			—			(12,360		)
Repayments of debt	—			(41,485		)	(3,820		)	35,000			(10,305		)
Borrowings under revolver	—			645,894			—			—			645,894
Repayments on revolver	—			(673,866		)	—			—			(673,866		)
Capital contributions received	—			10,800			39,034			(49,834		)	—
Intercompany dividends paid	—			(54,000		)	(20,939		)	74,939			—
Dividends and distributions on common stock	(122,051		)	—			—			—			(122,051		)
Distributions to non-controlling interest	—			—			(4,861		)	—			(4,861		)
Proceeds from exercise of Vector options	4,407			—			—			—			4,407
Tax benefit of options exercised	937			—			—			—			937
Net cash provided by (used in) financing activities	279,683			(72,489		)	9,414			25,105			241,713
Net increase in cash and cash equivalents	105,967			7,686			32,297			—			145,950
Cash and cash equivalents, beginning of period	151,342			11,812			71,312			—			234,466
Cash and cash equivalents, end of period	$	257,309		$	19,498		$	103,609		$	—		$	380,416

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	44,750		$	127,382		$	1,524		$	(118,412	)	$	55,244
Cash flows from investing activities:
Sale of investment securities	76,067			6,582			—			—			82,649
Purchase of investment securities	(117,982		)	(11,501		)	—			—			(129,483		)
Proceeds from sale of or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(45,977		)	—			(45,977		)
Investments in real estate held for sale	—			—			(7,697		)	—			(7,697		)
Distributions from real estate ventures	—			—			2,463			—			2,463
Increase in cash surrender value of life insurance policies	(20		)	(450		)	—			—			(470		)
Decrease (increase) in restricted assets	5			(558		)	—			—			(553		)
Repayments of notes receivable	9,460			—			—			—			9,460
Proceeds from sale of fixed assets	—			11			—			—			11
Investments in subsidiaries	(72,962		)	—			—			72,962			—
Capital expenditures	(2,320		)	(5,813		)	(553		)	—			(8,686		)
Net cash used in investing activities	(112,752		)	(11,729		)	(51,689		)	72,962			(103,208		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			1,120			3,080			—			454,200
Financing costs	(11,750		)	—			—			—			(11,750		)
Repayments of debt	(415,000		)	(5,604		)	(106		)	—			(420,710		)
Borrowings under revolver	—			723,578			—			—			723,578
Repayments on revolver	—			(736,007		)	—			—			(736,007		)
Capital contributions received	—			13,250			59,712			(72,962		)	—
Intercompany dividends paid	—			(105,882		)	(12,530		)	118,412			—
Dividends and distributions on common stock	(107,302		)	—			—			—			(107,302		)
Proceeds from exercise of Vector options	528			—			—			—			528
Tax benefits from exercise of Vector options	33			—			—			—			33
Net cash (used in) provided by financing activities	(83,491		)	(109,545		)	50,156			45,450			(97,430		)
Net (decrease) increase in cash and cash equivalents	(151,493		)	6,108			(9		)	—			(145,394		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	249,851		$	9,884		$	726		$	—		$	260,461

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Summary of Significant Accounting Policies Goodwill, Trademarks and Other Intangible Assets, net (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounting Policies [Abstract]
Intangible assets, net	$ 7,649	$ 11,919
Goodwill	72,976	71,681
Trademarks	80,005	80,000
Intangible asset associated with benefit under the Master Settlement Agreement	107,511	107,511
Goodwill, trademarks and other intangible assets, net	$ 268,141	$ 271,111

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Notes Payable, Long-Term Debt and Other Obligations Fair Value of Notes Payable and Long Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 1,445,085
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	958,265	692,343
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt		$ 1,006,562

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 380,416	$ 234,466
Investment securities available for sale	333,883	172,534
Accounts receivable - trade, net	13,607	12,159
Inventories	100,874	93,496
Deferred income taxes	25,540	50,479
Income taxes receivable, net	14,812	0
Restricted assets	2,780	1,785
Other current assets	34,226	23,392
Total current assets	906,138	588,311
Property, plant and equipment, net	86,622	79,258
Real estate held for sale, net	10,643	20,911
Long-term investments accounted for at cost	32,239	20,788
Long-term investments accounted for under the equity method	13,977	8,595
Investments in real estate ventures	154,281	128,202
Restricted assets	12,063	11,981
Deferred income taxes	70,316	51,474
Goodwill, trademarks and other intangible assets, net	268,141	271,111
Prepaid pension costs	28,165	26,080
Other assets	60,798	53,553
Total assets	1,643,383	1,260,264
Current liabilities:
Current portion of notes payable and long-term debt	101,158	151,577
Current portion of fair value of derivatives embedded within convertible debt	2,996	19,128
Current payments due under the Master Settlement Agreement	91,590	25,348
Current portion of employee benefits	939	939
Accounts payable	10,845	10,260
Accrued promotional expenses	20,010	18,655
Income taxes payable, net	3,174	6,423
Accrued excise and payroll taxes payable, net	861	11,621
Litigation accruals	3,307	59,310
Deferred income taxes	57,763	45,734
Accrued interest	17,721	21,968
Other current liabilities	34,256	34,147
Total current liabilities	344,620	405,110
Notes payable, long-term debt and other obligations, less current portion	857,107	540,766
Fair value of derivatives embedded within convertible debt	180,474	92,934
Non-current employee benefits	48,608	47,917
Deferred income taxes	165,726	137,650
Payments due under the Master Settlement Agreement	25,809	27,571
Litigation accruals	25,029	27,058
Other liabilities	3,877	2,867
Total liabilities	1,651,250	1,281,873
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, 250,000,000 and 150,000,000 shares authorized, 113,270,834 and 101,430,853 shares issued and 109,125,587 and 97,482,998 shares outstanding	10,912	9,748
Additional paid-in capital	0	0
Accumulated deficit	(126,739)	(114,787)
Accumulated other comprehensive income	38,694	22,860
Less: 4,145,247 and 3,947,855 shares of common stock in treasury, at cost	(12,857)	(12,857)
Total Vector Group Ltd. stockholders' deficiency	(89,990)	(95,036)
Non-controlling interest	82,123	73,427
Total stockholders' deficiency	(7,867)	(21,609)
Total liabilities and stockholders' deficiency	$ 1,643,383	$ 1,260,264

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Long-Term Investments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Schedule of Equity Method Investments [Line Items]
Contributions to acquire interest			$ 12,000
Equity income from real estate ventures	3,258	9,489	3,002	16,774
Long-term investments accounted for under the equity method	13,977		13,977		8,595
Limited Partnership [Member]
Schedule of Equity Method Investments [Line Items]
Equity income from real estate ventures	829	(53)
Hedge Funds [Member]
Schedule of Equity Method Investments [Line Items]
Equity income from real estate ventures			1,462	770
Long-term investments accounted for under the equity method	$ 13,977		$ 13,977		$ 8,595

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 19,705	$ (36,891)	$ 36,265	$ (25,061)
Net unrealized gains on investment securities available for sale:
Change in net unrealized gains	19,184	11,848	22,292	28,752
Net unrealized (losses) gains reclassified into net income	(33)	99	38	(5,110)
Net unrealized gains on investment securities available for sale	19,151	11,947	22,330	23,642
Net unrealized (losses) gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	(4,694)	1,754	3,920	1,170
Net unrealized (losses) gains reclassified into net income	0	0	0	0
Net unrealized (losses) gains on long-term investments accounted for under the equity method	(4,694)	1,754	3,920	1,170
Net change in forward contracts	16	16	48	47
Net change in pension-related amounts	147	350	442	1,052
Other comprehensive income	14,620	14,067	26,740	25,911
Income tax effect on:
Change in net unrealized gains on investment securities	(7,438)	(4,810)	(9,218)	(11,673)
Net unrealized (losses) gains reclassified into net income on investment securities	13	(41)	(16)	2,074
Change in unrealized (losses) gains on long-term investments	1,933	(712)	(1,621)	(475)
Net unrealized (losses) gains reclassified into net income on long-term investments accounted for under the equity method	0	0	0	0
Forward contracts	(8)	(7)	(20)	(19)
Pension-related amounts	(105)	(142)	(31)	(427)
Income tax provision on other comprehensive income	(5,605)	(5,712)	(10,906)	(10,520)
Other comprehensive income, net of tax	9,015	8,355	15,834	15,391
Comprehensive income (loss)	28,720	(28,536)	52,099	(9,670)
Comprehensive income attributed to non-controlling interest	(4,826)	0	(10,881)	0
Comprehensive income (loss) attributed to Vector Group Ltd.	$ 23,894	$ (28,536)	$ 41,218	$ (9,670)

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Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			3 Months Ended
	Mar. 31, 2014	Sep. 30, 2014 Senior Secured 11 Percent Notes Due 2015 [Member] Secured Debt [Member]	Dec. 13, 2013 Douglas Elliman Realty LLC [Member] New Valley LLC [Member]	Mar. 31, 2014 Tax Expense [Member]	Mar. 31, 2014 Additional Paid-In Capital [Member]	Mar. 31, 2014 Other Comprehensive Income (Loss) [Member]
Debt Instrument [Line Items]
Percent of acquired interest in affiliate			20.59%
Tax adjustment as result of acquisition	$ 1,944			$ 639	$ 865	$ 440
Interest Rate		11.00%

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Summary of Significant Accounting Policies Net Income (Loss) for Purposes of Determining Diluted EPS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Net income (loss) attributed to Vector Group Ltd.	$ 14,879	$ (36,891)	$ 25,384	$ (25,061)
Expense attributed to participating securities	(423)	0	(739)	0
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$ 14,456	$ (36,891)	$ 24,645	$ (25,061)

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Condensed Consolidating Financial Information Statements of Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 419,876	$ 277,941	$ 1,173,725	$ 780,336
Expenses:
Cost of sales	287,236	200,835	805,555	564,457
Operating, selling, administrative and general expenses	69,431	26,478	200,431	77,915
Litigation settlement and judgment expense	225	87,913	1,725	87,913
Management fee expense	0	0	0	0
Operating income (loss)	62,984	(37,285)	166,014	50,051
Other income (expenses):
Interest expense	(44,034)	(33,583)	(123,670)	(99,045)
Change in fair value of derivatives embedded within convertible debt	7,127	2,800	7,447	8,299
Acceleration of interest expense related to debt conversion	(994)	0	(5,112)	0
Loss on extinguishment of debt	0	0	0	(21,458)
Equity income from real estate ventures	3,258	9,489	3,002	16,774
Equity income (loss) on long-term investments	829	(53)	1,462	770
Gain (loss) on sale of investment securities available for sale	33	(99)	(38)	5,110
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	2,466	2,871	8,167	5,151
Income (loss) before provision for income taxes	31,669	(55,860)	57,272	(34,348)
Income tax benefit (expense)	(11,964)	18,969	(21,007)	9,287
Net income (loss)	19,705	(36,891)	36,265	(25,061)
Net income attributed to non-controlling interest	(4,826)	0	(10,881)	0
Net income (loss) attributed to Vector Group Ltd.	14,879	(36,891)	25,384	(25,061)
Comprehensive income attributed to non-controlling interest	(4,826)	0	(10,881)	0
Comprehensive income (loss)	28,720	(28,536)	52,099	(9,670)
Comprehensive income (loss) attributed to Vector Group Ltd.	23,894	(28,536)	41,218	(9,670)
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0	0	0	0
Expenses:
Cost of sales	0	0	0	0
Operating, selling, administrative and general expenses	6,099	4,968	17,315	16,350
Litigation settlement and judgment expense	0	0	0	0
Management fee expense	0	0	0	0
Operating income (loss)	(6,099)	(4,968)	(17,315)	(16,350)
Other income (expenses):
Interest expense	(43,005)	(32,978)	(120,977)	(97,661)
Change in fair value of derivatives embedded within convertible debt	7,127	2,800	7,447	8,299
Acceleration of interest expense related to debt conversion	(994)		(5,112)
Loss on extinguishment of debt				(21,458)
Equity income from real estate ventures	0	0	0	0
Equity income (loss) on long-term investments	829	(53)	1,462	770
Gain (loss) on sale of investment securities available for sale	33	(99)	(38)	(296)
Equity income in consolidated subsidiaries	36,428	(11,514)	96,554	52,051
Management fee income	2,467	2,377	7,402	7,131
Other, net	1,936	603	3,702	2,550
Income (loss) before provision for income taxes	(1,278)	(43,832)	(26,875)	(64,964)
Income tax benefit (expense)	16,157	6,941	52,259	39,903
Net income (loss)	14,879	(36,891)	25,384	(25,061)
Net income attributed to non-controlling interest	0		0
Net income (loss) attributed to Vector Group Ltd.	14,879		25,384
Comprehensive income attributed to non-controlling interest	0		0
Comprehensive income (loss)		(28,536)		(9,670)
Comprehensive income (loss) attributed to Vector Group Ltd.	23,894		41,218
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	266,328	271,516	758,645	761,038
Expenses:
Cost of sales	190,794	194,991	544,024	548,377
Operating, selling, administrative and general expenses	22,395	19,990	66,270	56,939
Litigation settlement and judgment expense	225	87,913	1,725	87,913
Management fee expense	2,467	2,377	7,402	7,131
Operating income (loss)	50,447	(33,755)	139,224	60,678
Other income (expenses):
Interest expense	(1,026)	(602)	(3,265)	(1,374)
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
Equity income from real estate ventures	0	0	0	0
Equity income (loss) on long-term investments	0	0	0	0
Gain (loss) on sale of investment securities available for sale	0	0	0	5,406
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	296	2,270	780	2,475
Income (loss) before provision for income taxes	49,717	(32,087)	136,739	67,185
Income tax benefit (expense)	(21,491)	15,521	(57,846)	(24,270)
Net income (loss)	28,226	(16,566)	78,893	42,915
Net income attributed to non-controlling interest	0		0
Net income (loss) attributed to Vector Group Ltd.	28,226		78,893
Comprehensive income attributed to non-controlling interest	0		0
Comprehensive income (loss)		(11,923)		49,701
Comprehensive income (loss) attributed to Vector Group Ltd.	28,367		79,026
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	153,748	6,425	415,280	19,298
Expenses:
Cost of sales	96,442	5,844	261,531	16,080
Operating, selling, administrative and general expenses	41,137	1,520	117,046	4,626
Litigation settlement and judgment expense	0	0	0
Management fee expense	0	0	0	0
Operating income (loss)	16,169	(939)	36,703	(1,408)
Other income (expenses):
Interest expense	(3)	(3)	(40)	(10)
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
Equity income from real estate ventures	3,258	9,489	3,002	16,774
Equity income (loss) on long-term investments	0	0	0	0
Gain (loss) on sale of investment securities available for sale	0	0	0	0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	234	(2)	4,297	126
Income (loss) before provision for income taxes	19,658	8,545	43,962	15,482
Income tax benefit (expense)	(6,630)	(3,493)	(15,420)	(6,346)
Net income (loss)	13,028	5,052	28,542	9,136
Net income attributed to non-controlling interest	(4,826)		(10,881)
Net income (loss) attributed to Vector Group Ltd.	8,202		17,661
Comprehensive income attributed to non-controlling interest	(4,826)		(10,881)
Comprehensive income (loss)		5,052		9,136
Comprehensive income (loss) attributed to Vector Group Ltd.	8,202		17,661
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	(200)	0	(200)	0
Expenses:
Cost of sales	0	0	0	0
Operating, selling, administrative and general expenses	(200)	0	(200)	0
Litigation settlement and judgment expense	0	0	0
Management fee expense	(2,467)	(2,377)	(7,402)	(7,131)
Operating income (loss)	2,467	2,377	7,402	7,131
Other income (expenses):
Interest expense	0	0	612	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
Equity income from real estate ventures	0	0	0	0
Equity income (loss) on long-term investments	0	0	0	0
Gain (loss) on sale of investment securities available for sale	0	0	0	0
Equity income in consolidated subsidiaries	(36,428)	11,514	(96,554)	(52,051)
Management fee income	(2,467)	(2,377)	(7,402)	(7,131)
Other, net	0	0	(612)	0
Income (loss) before provision for income taxes	(36,428)	11,514	(96,554)	(52,051)
Income tax benefit (expense)	0	0	0	0
Net income (loss)	(36,428)	11,514	(96,554)	(52,051)
Net income attributed to non-controlling interest	0		0
Net income (loss) attributed to Vector Group Ltd.	(36,428)		(96,554)
Comprehensive income attributed to non-controlling interest	0		0
Comprehensive income (loss)		6,871		(58,837)
Comprehensive income (loss) attributed to Vector Group Ltd.	$ (36,569)		$ (96,687)

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

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						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss) attributed to Vector Group Ltd.	$	14,879		$	(36,891	)	$	25,384		$	(25,061	)
Expense attributed to participating securities	(423		)	—			(739		)	—
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$	14,456		$	(36,891	)	$	24,645		$	(25,061	)

Basic and diluted EPS calculation shares

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Weighted-average shares for basic EPS	103,213,667	95,775,444	101,395,081	95,741,318
Plus incremental shares related to stock options and non-vested restricted stock	114,623	—	113,070	—
Weighted-average shares for basic and fully diluted EPS	103,328,290	95,775,444	101,508,151	95,741,318

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 nine months ended September 30, 2014 and 2013 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Number of stock options	N/A		524,887		N/A		524,887
Weighted-average exercise price	N/A		$	11.88	N/A		$	11.88
Weighted-average shares of non-vested restricted stock	N/A		55,125		N/A		55,125
Weighted-average expense per share	N/A		$	15.52	N/A		$	15.52
Weighted-average number of shares issuable upon   conversion of debt	32,599,702		29,726,047		31,257,300		29,726,047
Weighted-average conversion price	$	18.36	$	14.50	$	17.30	$	14.50

Schedule of other income (loss), net

Other income, net consists of:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014			2013		2014			2013
Gain on warrants	$	991		$	135	$	868		$	172
Interest income	1,476			2,647		3,665			4,123
Accretion of interest income from debt discount on notes receivable	11			81		87			704
Out-of-period adjustment	—			—		1,231			—
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—		2,335			—
Gain on long-term investment	—			—		—			142
Other (expense) income	(12		)	8		(19		)	10
Other income, net	$	2,466		$	2,871	$	8,167		$	5,151

Schedule of revision of prior period gross revenues and costs

In connection with the December 13, 2013 acquisition of Douglas Elliman, the Company was required to disclose Douglas Elliman’s revenues and costs separately on the face of its condensed consolidated statements of operation. Consequently, the Company also revised the prior period in order to correctly present the gross revenues and costs of the other consolidated real estate investments as follows:

	Three Months Ended							Nine Months Ended
	September 30, 2013							September 30, 2013
	As Previously Reported		Revision			As Revised		As Previously Reported		Revision			As Revised
Revenues	$	271,516	$	(271,516	)	$	—	$	761,038	$	(761,038	)	$	—
Tobacco revenues	—		271,516			271,516		—		761,038			761,038
Real estate revenues	—		6,425			6,425		—		19,298			19,298
Total revenue	271,516		6,425			277,941		761,038		19,298			780,336
Cost of Sales	194,991		(194,991		)	—		548,377		(548,377		)	—
Tobacco cost of sales	—		194,991			194,991		—		548,377			548,377
Real estate cost of sales	—		5,844			5,844		—		16,080			16,080
Total cost of sales	194,991		5,844			200,835		548,377		16,080			564,457
Operating, selling, administrative and general expenses	$	25,897	$	581		$	26,478	$	74,697	$	3,218		$	77,915

Schedule of Goodwill, Trademarks and Other Intangible Assets, net:

The components of "Goodwill, trademarks and other intangible assets, net" were as follows:

	September 30, 2014		December 31, 2013
Intangible assets, net	$	7,649	$	11,919
Goodwill	72,976		71,681
Trademarks	80,005		80,000
Intangible asset associated with benefit under the Master Settlement Agreement	107,511		107,511
	$	268,141	$	271,111

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Summary of Significant Accounting Policies Basic and Diluted Earnings Per Share, Shares (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Weighted-average shares for basic EPS	103,213,667	95,775,444	101,395,081	95,741,318
Plus incremental shares related to stock options and non-vested restricted stock	114,623	0	113,070	0
Weighted-average shares for basic and fully diluted EPS	103,328,290	95,775,444	101,508,151	95,741,318

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Investment Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2014

Available-for-sale Securities [Abstract]

Available-for-sale Securities

The components of investment securities available for sale at September 30, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	56,098	$	88,913	$	(1,047	)	$	143,964
Mutual funds invested in fixed income securities	60,637		—		(586		)	60,051
Marketable debt securities	129,432		1,616		(1,180		)	129,868
Total investment securities available for sale	$	246,167	$	90,529	$	(2,813	)	$	333,883

The components of investment securities available for sale at December 31, 2013 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	53,586	$	65,851	$	(963	)	$	118,474
Marketable debt securities	53,063		1,497		(500		)	54,060
Total investment securities available for sale	$	106,649	$	67,348	$	(1,463	)	$	172,534

Schedule of Maturity Dates of Fixed Income Securities

The table below summarizes the maturity dates of marketable debt securities at September 30, 2014.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	44,220	$	—	$	44,220	$	—
Corporate securities	50,913		3,480		40,031		7,402
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		2,261		13,300		—
U.S. asset backed securities	14,671		3,980		10,691		—
Government agencies	2,900		731		2,169		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total marketable debt securities by maturity dates	$	129,868	$	10,452	$	112,014	$	7,402

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Condensed Consolidated Statements of Stockholders' Deficiency (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended							9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Common Stock [Member]	Sep. 30, 2014 Additional Paid-In Capital [Member]	Sep. 30, 2014 Accumulated Deficit [Member]	Sep. 30, 2014 Accumulated Other Comprehensive (Loss) Income [Member]	Sep. 30, 2014 Treasury Stock [Member]	Dec. 31, 2013 Treasury Stock [Member]	Sep. 30, 2014 Noncontrolling Interest [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ (21,609)	$ 9,748	$ 0	$ (114,787)	$ 22,860	$ (12,857)	$ (12,857)	$ 73,427
Beginning Balance (in shares)		97,482,998
Net income (loss)	36,265			25,384				10,881
Change in net loss and prior service cost, net of income taxes	411				411
Forward contract adjustments, net of income taxes	28				28
Unrealized gain on long-term investment securities accounted for under the equity method, net of income taxes	2,299				2,299
Change in net unrealized gain on investment securities available for sale, net of income taxes	13,074				13,074
Net unrealized loss on investment securities available for sale reclassified into net income, net of income taxes	22				22
Unrealized gain on investment securities, net of income taxes	13,096
Total other comprehensive income	15,834
Comprehensive income (loss)	52,099
Distributions and dividends on common stock	(121,340)		(84,524)	(36,816)
Restricted stock grant	100	100
Restricted stock grant (in shares)		1,000,000
Effect of stock dividend	0	520		(520)
Effect of stock dividend (in shares)		5,195,856
Note conversions, inclusive of taxes $1,006	63,149	510	62,639
Note conversion, inclusive of taxes $1,006 (in shares)		5,107,050
Beneficial conversion feature of notes payable, net of income taxes of $10,327	14,648		14,648
Exercise of stock options	4,307	34	4,273
Exercise of stock options (in shares)		339,683
Tax benefit of options exercised	937		937
Stock-based compensation	2,027		2,027
Contributions made by non-controlling interest	2,676							2,676
Distributions to non-controlling interest	(4,861)							(4,861)
Ending Balance	$ (7,867)	$ 10,912	$ 0	$ (126,739)	$ 38,694	$ (12,857)	$ (12,857)	$ 82,123
Ending Balance (in shares)		109,125,587

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Stockholders' deficiency:
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	250,000,000	150,000,000
Common stock, shares issued (in shares)	113,270,834	101,430,853
Common stock, shares outstanding (in shares)	109,125,587	97,482,998
Common stock in treasury, shares (in shares)	4,145,247	3,947,855

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Income Taxes

9 Months Ended

Sep. 30, 2014

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 consisted of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014		2013
Income (loss) before provision for income taxes	$	31,669		$	(55,860	)	$	57,272	$	(34,348	)
Income tax expense using estimated annual effective income tax rate	9,932			(22,763		)	17,962		(13,997		)
Changes in effective tax rates	(374		)	1,181			—		1,159
Increase in unrecognized tax benefits	—			251			—		373
Impact of discrete items, net	1,305			—			1,944		816
Impact of discrete item associated with litigation settlement	—			2,362			—		2,362
Inclusion of tax liabilities from unincorporated entities	1,101			—			1,101		—
Income tax expense (benefit)	$	11,964		$	(18,969	)	$	21,007	$	(9,287	)

In the first quarter of 2014, the Company properly determined an adjustment for $1,944 related to its marginal tax rate was required as a result of its acquisition of 20.59% of Douglas Elliman Realty, LLC. This amount was originally recorded as additional income tax expense of $639, a reduction of Additional Paid-In Capital of $865 and a reduction of Other Comprehensive Income of $440. During the three months ended September 30, 2014 the Company reassessed the treatment of the previously recorded reductions to Additional Paid-In-Capital and Accumulated Other Comprehensive Income and reclassified such amounts as an increase to income tax expense.  The Company assessed the materiality of the misclassifications on the financial statements in the prior quarters of 2014 and concluded that it was immaterial to all previously issued quarterly financial statements and the three and nine months ended September 30, 2014.

The discrete item for the nine months ended September 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 September 30, 2013 and the accrual of an unrecognized tax benefit.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
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	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		109,125,587

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Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2014

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 September 30, 2014
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	$	220,197	$	220,197	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	5,093		5,093		—		—
Investment securities available for sale							—
Equity securities	143,964		143,403		561		—
Mutual funds invested in fixed income securities	60,051		60,051		—		—
Fixed income securities
U.S. Government securities	44,220		—		44,220		—
Corporate securities	50,913		6,525		44,388		—
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		—		15,561		—
U.S. asset backed securities	14,671		—		14,671		—
U.S. Government agencies	2,900		—		2,900		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total fixed income securities	129,868		6,525		123,343		—
Warrants (1)	2,638		—		—		2,638
Total	$	565,273	$	435,269	$	127,366	$	2,638
Liabilities:
Fair value of derivatives embedded within convertible debt	$	183,470	$	—	$	—	$	183,470

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,638 as of September 30, 2014 and are included in "Other assets". The Company recognized income of $868 for the nine months ended September 30, 2014 related to the change in fair value of the Warrants.

	Fair Value Measurements as of December 31, 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	$	130,733	$	130,733	$	—	$	—
Certificates of deposit	2,961		—		2,961		—
Bonds	5,337		5,337		—		—
Investment securities available for sale							—
Equity securities	118,474		117,737		737		—
Fixed income securities							—
U.S. Government securities	13,990		—		13,990		—
Corporate securities	29,923		6,497		23,426		—
U.S. mortgage backed securities	495		—		495		—
Commercial mortgage-backed securities	6,822		—		6,822		—
U.S. asset backed securities	2,081		—		2,081		—
Index-linked U.S. bonds	749		—		749		—
Total fixed income securities	54,060		6,497		47,563		—
Warrants (1)	1,935		—		—		1,935
Total	$	313,500	$	260,304	$	51,261	$	1,935
Liabilities:
Fair value of derivatives embedded within convertible debt	$	112,062	$	—	$	—	$	112,062

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $1,758 as of December 31, 2013 and are included in "Other assets". The Company recognized income of $172 for the nine months ended September 30, 2013 related to the change in fair value of the Warrants.

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 5.50% 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 based 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 $7,447 and $8,299 for the nine months ended September 30, 2014 and 2013, respectively, related to the change in fair value of the embedded derivatives.

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 September 30, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,638	Option model	Stock price	$	4.24
				Exercise price	$	1.68
				Term (in years)	2.1
				Volatility	44.76		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	183,470	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.18
				Convertible trading price	111.63		%
				Volatility	16		%
				Implied credit spread	5.0% - 6.0% (5.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2013:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2013		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	1,935	Option model	Stock price	$	3.13
				Exercise price	$	1.68
				Term (in years)	2.8
				Volatility	53.82		%
				Dividend rate	—
				Risk-free return	0.72		%
Fair value of derivatives embedded within convertible debt	$	112,062	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	16.37
				Convertible trading price	118.70		%
				Volatility	18		%
				Implied credit spread	7.5% - 8.5% (8.0%)

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 or acquisitions. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of September 30, 2014 and December 31, 2013.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Revenues:
Tobacco	$ 264,520	[1]	$ 271,516	[1]	$ 748,468	[1]	$ 761,038	[1]
Real estate	153,748		6,425		415,280		19,298
E-Cigarettes	1,608		0		9,977		0
Total revenues	419,876		277,941		1,173,725		780,336
Cost of sales:
Tobacco	189,728	[1]	194,991	[1]	537,667	[1]	548,377	[1]
Real estate	96,442		5,844		261,531		16,080
E-Cigarettes	1,066		0		6,357		0
Total cost of sales	287,236		200,835		805,555		564,457
Operating, selling, administrative and general expenses	69,431		26,478		200,431		77,915
Litigation settlement and judgment expense	225		87,913		1,725		87,913
Operating income (loss)	62,984		(37,285)		166,014		50,051
Other income (expenses):
Interest expense	(44,034)		(33,583)		(123,670)		(99,045)
Loss on extinguishment of debt	0		0		0		(21,458)
Change in fair value of derivatives embedded within convertible debt	7,127		2,800		7,447		8,299
Acceleration of interest expense related to debt conversion	(994)		0		(5,112)		0
Equity income from real estate ventures	3,258		9,489		3,002		16,774
Equity income (loss) on long-term investments	829		(53)		1,462		770
Gain (loss) on sale of investment securities available for sale	33		(99)		(38)		5,110
Other, net	2,466		2,871		8,167		5,151
Income (loss) before provision for income taxes	31,669		(55,860)		57,272		(34,348)
Income tax expense (benefit)	11,964		(18,969)		21,007		(9,287)
Net income (loss)	19,705		(36,891)		36,265		(25,061)
Net income attributed to non-controlling interest	(4,826)		0		(10,881)		0
Net income (loss) attributed to Vector Group Ltd.	$ 14,879		$ (36,891)		$ 25,384		$ (25,061)
Per basic common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$ 0.14		$ (0.39)		$ 0.24		$ (0.26)
Per diluted common share:
Net income (loss) applicable to common shares attributed to Vector Group Ltd.	$ 0.14		$ (0.39)		$ 0.24		$ (0.26)
Cash distributions and dividends declared per share	$ 0.38		$ 0.36		$ 1.14		$ 1.09

[1] Revenues and cost of sales include excise taxes of $115,323, $121,787, $327,434 and $343,294, respectively.

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Investment Securities Available for Sale

9 Months Ended

Sep. 30, 2014

Available-for-sale Securities [Abstract]

Investment Securities Available for Sale

INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at September 30, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	56,098	$	88,913	$	(1,047	)	$	143,964
Mutual funds invested in fixed income securities	60,637		—		(586		)	60,051
Marketable debt securities	129,432		1,616		(1,180		)	129,868
Total investment securities available for sale	$	246,167	$	90,529	$	(2,813	)	$	333,883

The components of investment securities available for sale at December 31, 2013 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	53,586	$	65,851	$	(963	)	$	118,474
Marketable debt securities	53,063		1,497		(500		)	54,060
Total investment securities available for sale	$	106,649	$	67,348	$	(1,463	)	$	172,534

The table below summarizes the maturity dates of marketable debt securities at September 30, 2014.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	44,220	$	—	$	44,220	$	—
Corporate securities	50,913		3,480		40,031		7,402
U.S. mortgage backed securities	297		—		297		—
Commercial mortgage-backed securities	15,561		2,261		13,300		—
U.S. asset backed securities	14,671		3,980		10,691		—
Government agencies	2,900		731		2,169		—
Index-linked U.S. bonds	1,306		—		1,306		—
Total marketable debt securities by maturity dates	$	129,868	$	10,452	$	112,014	$	7,402

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Inventories

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories consist of:

	September 30, 2014			December 31, 2013
Leaf tobacco	$	55,769		$	49,140
Other raw materials	3,402			3,161
Work-in-process	606			353
Finished goods	63,628			67,201
E-Cigarettes	7,963			839
Inventories at current cost	131,368			120,694
LIFO adjustments	(30,494		)	(27,198		)
	$	100,874		$	93,496

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 September 30, 2014, Liggett had tobacco purchase commitments of approximately $11,948 and E-Cigarettes purchase commitments of $389. The Company has a single source supply agreement for fire safe cigarette paper through 2015.

All of the Company's inventories at September 30, 2014 and December 31, 2013 have been reported under the LIFO method.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories consist of:

	September 30, 2014			December 31, 2013
Leaf tobacco	$	55,769		$	49,140
Other raw materials	3,402			3,161
Work-in-process	606			353
Finished goods	63,628			67,201
E-Cigarettes	7,963			839
Inventories at current cost	131,368			120,694
LIFO adjustments	(30,494		)	(27,198		)
	$	100,874		$	93,496

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Segment Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company's significant business segments for the three and nine months ended September 30, 2014 and 2013 were Tobacco, E-Cigarettes and Real Estate. The Tobacco segment consists of the manufacture and sale of conventional cigarettes. The E-Cigarettes segment includes the operations of the Company's e-cigarette business. The Real Estate segment includes the Company’s investment in New Valley LLC, which includes Douglas Elliman, Escena, Indian Creek and investments in real estate ventures. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. As a result of the amount of operating losses of Zoom as of September 30, 2014, when compared to the remaining components of the Company's Corporate and Other segment, the Company has reevaluated its operating segments and has separated Zoom’s operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

Financial information for the Company's operations before taxes for the three and nine months ended September 30, 2014 and 2013 follows:

								Real			Corporate
	Tobacco				E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2014
Revenues	$	264,520			$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993			(1)	(2,910		)	16,222			(3,321		)	62,984
Equity income from real estate ventures	—				—			3,258			—			3,258
Depreciation and amortization	2,853				—			2,740			452			6,045
Three months ended September 30, 2013
Revenues	$	271,516			$	—		$	6,425		$	—		$	277,941
Operating loss	(32,414		)	(2)	(560		)	(806		)	(3,505		)	(37,285		)
Equity income from real estate ventures	—				—			9,489			—			9,489
Depreciation and amortization	2,361				—			160			251			2,772
Nine months ended September 30, 2014
Revenues	$	748,468			$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395			(3)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—				—			3,002			—			3,002
Identifiable assets	445,914				10,657			483,330			703,482			1,643,383
Depreciation and amortization	7,934				—			9,709			956			18,599
Capital expenditures	7,911				—			5,614			7,221			20,746
Nine months ended September 30, 2013
Revenues	$	761,038			$	—		$	19,298		$	—		$	780,336
Operating income (loss)	63,040			(4)	(560		)	(1,423		)	(11,006		)	50,051
Equity income from real estate ventures	—				—			16,774			—			16,774
Identifiable assets	425,186				3,834			208,339			483,596			1,120,955
Depreciation and amortization	7,114				—			440			451			8,005
Capital expenditures	5,813				—			553			2,320			8,686

⁽¹⁾ Operating income includes $225 of litigation judgment expense.

⁽²⁾ Operating income includes $4,016 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

⁽³⁾ Operating income includes $1,419 of income from NPM Settlement and $1,725 of litigation settlement charges and judgment expense.

⁽⁴⁾ Operating income includes $10,963 of income from NPM Settlement, $86,213 of Engle progeny settlement charge and $1,700 of litigation judgment expense.

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Notes Payable, Long Term Debt and Other Obligations

9 Months Ended

Sep. 30, 2014

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:

	September 30, 2014			December 31, 2013
Vector:
7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	$	609,577		$	450,000
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311*	23,267			30,689
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944*	64,902			81,586
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817*	80,658			74,183
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0*	157,083			—
Liggett:
Revolving credit facility	2,452			30,424
Term loan under credit facility	3,663			3,884
Equipment loans	16,128			17,252
Other	535			4,325
Total notes payable, long-term debt and other obligations	958,265			692,343
Less:
Current maturities	(101,158		)	(151,577		)
Amount due after one year	$	857,107		$	540,766

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($885 at September 30, 2014 and $6,607 at December 31, 2013, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($2,110 at September 30, 2014 and $12,521 at December 31, 2013, respectively), the 5.50% Variable Interest Senior Convertible Debentures ($86,228 at September 30, 2014 and $0 at December 31, 2013, respectively), and the 7.50% Variable Interest Senior Convertible Notes ($94,247 at September 30, 2014 and $92,934 at December 31, 2013, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

7.75% Senior Secured Notes due 2021 - Vector:

On April 15, 2014, the Company completed the sale of $150,000 principal amount of its 7.75% Senior Secured Notes due 2021 for a price of 106.750% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933. The Company received net proceeds of approximately $158,700 after deducting underwriting discounts, commissions, fees and offering expenses. The Company will amortize the deferred costs and debt premium related to the additional Senior Secured Notes over the estimated life of the debt.

In August 2014, the Company completed an offer to exchange the 7.75% senior secured notes issued in April 2014 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.

6.75% Variable Interest Senior Convertible Note due 2014 - Vector:

On March 14, 2014, the holder of the 6.75% Variable Interest Senior Convertible Note due 2014 converted $25,000 principal balance of the $50,000 Note into 2,121,479 of the Company's common shares. The Company recorded non-cash accelerated interest expense related to the converted debt of $3,679 for the nine months ended September 30, 2014. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $25,000. The outstanding principal balance due November 15, 2014 is $25,000.

6.75% Variable Interest Senior Convertible Exchange Notes due 2014 - Vector:

On May 20, 2014, a holder of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $7,500 principal balance of the $107,530 Notes into 560,987 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $7,500.

In August, 2014, holders of the 6.75% Variable Interest Senior Convertible Exchange Notes due 2014 converted $32,415 principal balance of the $107,530 Notes into 2,424,584 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $32,415. The outstanding principal balance due November 15, 2014 is $67,615.

The Company recorded non-cash accelerated interest expense related to the converted debt of $994 and $1,433 for the three and nine months ended September 30, 2014.

5.5% Variable Interest Senior Convertible Notes due 2020 - Vector:

On March 24, 2014, the Company completed the sale of $258,750 of its 5.5% Variable Interest Convertible Senior Notes due 2020 (the "2020 Convertible Notes"). The 2020 Convertible Notes are the Company's senior unsecured obligations and are effectively subordinated to any of its secured indebtedness to the extent of the assets securing such indebtedness. The 2020 Convertible Notes are also structurally subordinated to all liabilities and commitments of the Company's subsidiaries.

The aggregate net proceeds from the sale of the 2020 Convertible Notes were approximately $250,300 after deducting underwriting discounts, commissions, fees and offering expenses. The net proceeds will be used for general corporate purposes, including for additional investments in real estate and in the Company's tobacco business. The Company may also consider using a portion of the net proceeds from the sale of the notes to address upcoming debt maturities.

The 2020 Convertible Notes pay interest (“Total Interest”) on a quarterly basis beginning April 15, 2014 at a rate of 1.75% per annum plus additional interest, which is based on the amount of cash dividends paid during the prior three-month period ending on the record date for such interest payment multiplied by the total number of shares of its common stock into which the debt will be convertible on such record date. Notwithstanding the foregoing, however, the interest payable on each interest payment date after April 15, 2014 shall be the higher of (i) the Total Interest and (ii) 5.5% per annum with the interest payment on April 15, 2014 being based on 5.5% per annum. The notes are convertible into the Company’s common stock at the holder’s option. The conversion price at September 30, 2014 was $25.87 per share (approximately 38.6563 shares of common stock per $1,000 principal amount of the note), and is subject to adjustment for various events, including the issuance of stock dividends. The notes will mature on April 15, 2020. If a fundamental change (as defined in the indenture) occurs, the Company will be required to offer to repurchase the notes at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Revolving Credit Facility and Term Loan Under Credit Facility - Liggett:

As of September 30, 2014, a total of $6,115 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the facility was approximately $43,885 based on eligible collateral at September 30, 2014.

Shares of Common Stock per$1,000Principal Amount due on Convertible Notes:

The conversion rates for all convertible debt outstanding as of September 30, 2014 are summarized below:

	September 30, 2014
	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	11.22	89.1021
6.75% Variable Interest Senior Convertible Exchange Notes due 2014	$	12.73	78.5381
7.5% Variable Interest Senior Convertible Notes due 2019	$	16.78	59.5946
5.5% Variable Interest Senior Convertible Debentures due 2020	$	25.87	38.6563

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Amortization of debt discount	$	14,277	$	9,620	$	41,180	$	25,432
Amortization of deferred finance costs	1,147		549		2,910		1,593
Loss on extinguishment of 11% Senior Secured Notes	—		—		—		3,638
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Note converted	—		—		3,679		—
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Exchange Notes converted	994		—		1,433		—
	$	16,418	$	10,169	$	49,202	$	30,663

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	958,265	$	1,445,085	$	692,343	$	1,006,562

Notes payable and long-term debt are carried on the condensed consolidated 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 consolidated 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 the Company's Form 10-K. 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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Investments and Fair Value Measurements (Details) (USD $)	3 Months Ended		9 Months Ended																9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 5.5% Variable Interest Senior Convertible Notes due 2020 Convertible Debt [Member]	Mar. 24, 2014 5.5% Variable Interest Senior Convertible Notes due 2020 Convertible Debt [Member]	Sep. 30, 2014 Equity securities	Dec. 31, 2013 Equity securities	Sep. 30, 2014 Mutual funds invested in fixed income securities	Sep. 30, 2014 U.S. Government securities	Sep. 30, 2014 Corporate securities	Sep. 30, 2014 U.S. mortgage backed securities	Sep. 30, 2014 Commercial mortgage-backed securities	Sep. 30, 2014 U.S. asset backed securities	Sep. 30, 2014 Government agencies	Sep. 30, 2014 Fixed income securities	Dec. 31, 2013 Fixed income securities	Sep. 30, 2014 Warrants (1) Ladenburg Thalmann Financial Services [Member] New Valley LLC [Member]	Sep. 30, 2013 Warrants (1) Ladenburg Thalmann Financial Services [Member] New Valley LLC [Member]	Dec. 31, 2013 Warrants (1) Ladenburg Thalmann Financial Services [Member] New Valley LLC [Member]	Nov. 04, 2011 Warrants (1) Ladenburg Thalmann Financial Services [Member] New Valley LLC [Member]	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Equity securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Equity securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Equity securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Equity securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Equity securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Equity securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Equity securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Equity securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Mutual funds invested in fixed income securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Mutual funds invested in fixed income securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Mutual funds invested in fixed income securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Mutual funds invested in fixed income securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. Government securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. Government securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. Government securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. Government securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. Government securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. Government securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. Government securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. Government securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Corporate securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Corporate securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Corporate securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Corporate securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Corporate securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Corporate securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Corporate securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Corporate securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. mortgage backed securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Commercial mortgage-backed securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] U.S. asset backed securities Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Government agencies Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Government agencies Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Government agencies Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Government agencies Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Index-linked U.S. bonds Significant Unobservable Inputs (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Fixed income securities Total	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Fixed income securities Total	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Fixed income securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Fixed income securities Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Fixed income securities Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Fixed income securities Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Fair Value, Measurements, Recurring [Member] Fixed income securities Significant Unobservable Inputs (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Recurring [Member] Fixed income securities Significant Unobservable Inputs (Level 3)
Assets:
Money market funds																							$ 220,197,000	$ 130,733,000	$ 220,197,000	$ 130,733,000	$ 0	$ 0	$ 0	$ 0
Certificates of deposit																							3,462,000	2,961,000	0	0	3,462,000	2,961,000	0	0
Bonds																							5,093,000	5,337,000	5,093,000	5,337,000	0	0	0	0
Investment securities available for sale	333,883,000		333,883,000		172,534,000			143,964,000	118,474,000	60,051,000	44,220,000	50,913,000	297,000	15,561,000	14,671,000	2,900,000	129,868,000	54,060,000											0		143,964,000	118,474,000	143,403,000	117,737,000	561,000	737,000	0	0	60,051,000	60,051,000	0	0	44,220,000	13,990,000	0	0	44,220,000	13,990,000	0	0	50,913,000	29,923,000	6,525,000	6,497,000	44,388,000	23,426,000	0	0	297,000	495,000	0	0	297,000	495,000	0	0	15,561,000	6,822,000	0	0	15,561,000	6,822,000	0	0	14,671,000	2,081,000	0	0	14,671,000	2,081,000	0	0	2,900,000	0	2,900,000	0	1,306,000	749,000	0	0	1,306,000	749,000	0	0	129,868,000	54,060,000	6,525,000	6,497,000	123,343,000	47,563,000	0	0
Warrants																							2,638,000	1,935,000	0	0	0	0	2,638,000	1,935,000
Total																							565,273,000	313,500,000	435,269,000	260,304,000	127,366,000	51,261,000	2,638,000	1,935,000
Liabilities:
Fair value of derivatives embedded within convertible debt																							183,470,000	112,062,000	0	0	0	0	183,470,000	112,062,000
Investment (in shares)																						1,000,000
Investment																			2,638,000		1,758,000
Change in fair value gain (loss)																			868,000	172,000
Interest rate						5.50%	5.50%
Income (loss) from embedded derivatives	7,127,000	2,800,000	7,447,000	8,299,000
Nonrecurring nonfinancial assets subject to fair value measurements	$ 0		$ 0		$ 0

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Long Term Investments

9 Months Ended

Sep. 30, 2014

Long-term Investments [Abstract]

Long-Term Investments

LONG-TERM INVESTMENTS

Long-term investments accounted for at cost:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investment partnerships	$	31,541	$	36,735	$	20,041	$	24,095
Real estate partnership	698		1,102		747		1,067
Investments accounted for at cost	$	32,239	$	37,837	$	20,788	$	25,162

The Company contributed an additional $12,000 to Investment Partnerships during the nine months ended September 30, 2014.

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

	September 30, 2014		December 31, 2013
Investment partnership	$	13,977	$	8,595

The Company recorded equity income of $829 and an equity loss of $53 for the three months ended September 30, 2014 and 2013, respectively, related to the limited partnership. The Company recorded equity income of $1,462 and $770 for the nine months ended September 30, 2014 and 2013, respectively, related to the limited partnership.

The carrying value of the investment was approximately $13,977 and $8,595 as of September 30, 2014 and December 31, 2013, respectively, which approximated the investment's fair value.

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New Valley LLC

9 Months Ended

Sep. 30, 2014

New Valley LLC [Abstract]

New Valley LLC

NEW VALLEY LLC

Residential Brokerage Business Acquisition. New Valley is engaged in the real estate business and is seeking to acquire additional real estate properties and operating companies.As of January 1, 2013, the Company owned a 50% interest in Douglas Elliman, and the Company accounted for its 50% using the equity method of accounting. On December 13, 2013, an affiliate of New Valley acquired an additional 20.59% interest in Douglas Elliman from Prudential Real Estate Financial Services of America, Inc. for a purchase price of $60,000 in cash. The acquisition increased the Company's ownership position in Douglas Elliman from 50% to 70.59% and resulted in the Company having control.

The transaction was accounted for as an acquisition of a business in the fourth quarter of 2013. The preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013 and September 30, 2014.

Equity Method of Accounting. Prior to December 13, 2013, New Valley accounted for its 50% interest in Douglas Elliman under the equity method of accounting. New Valley recorded income associated with Douglas Elliman of $9,075 and $16,513 for the three and nine months ended September 30, 2013, respectively, which included management fees earned by New Valley from Douglas Elliman.

Summarized income statement information for Douglas Elliman for the three and nine months ended September 30, 2013, is presented below.

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Revenues	$	127,537		$	315,721
Costs and expenses	109,178			282,885
Depreciation expense	986			2,944
Amortization expense	56			167
Other income	(109		)	(512		)
Interest income, net	(14		)	(22		)
Income tax expense	442			684
Net income	$	16,998		$	29,575

New Valley received cash distributions from Douglas Elliman of $2,961 for the nine months ended September 30, 2013.

Investments in real estate ventures.  New Valley also holds equity investments in various real estate projects domestically and internationally. The components of “Investments in real estate ventures” were as follows:

	September 30, 2014		December 31, 2013
Milanosesto Holdings (f/k/a Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (f/k/a 1107 Broadway)	6,384		6,579
The Whitman	526		1,165
The Marquand	12,000		7,000
11 Beach Street	12,328		11,160
20 Times Square (f/k/a 701 Seventh Avenue)	12,481		11,148
101 Murray Street	25,269		19,256
160 Leroy Street	1,353		1,150
PUBLIC Chrystie House (f/k/a Chrystie Street)	3,180		2,048
25-19 43rd Avenue	733		—
Queens Plaza (f/k/a 23-10 Queens Plaza South)	12,590		8,058
8701 Collins Avenue	4,634		3,794
125 Greenwich Street	9,308		—
Condominium and Mixed Use Development	100,786		71,358
Maryland Portfolio	3,348		3,498
ST Portfolio	15,508		15,984
Apartment Buildings	18,856		19,482
Park Lane Hotel	18,097		19,514
Hotel Taiwana	6,850		7,428
Coral Beach and Tennis Club	2,708		2,964
Hotels	27,655		29,906
Other	1,947		2,419
Investments in real estate ventures	$	154,281	$	128,202

Condominium and Mixed Use Development:

Condominium and mixed use developments investments range in ownership percentage from 5% to 49.5%. New Valley recorded equity income of $5,090 and $7,389 during the three and nine months ended September 30, 2014, respectively. The Company recorded $5,000 of income from real estate ventures for the three and nine months ended September 30, 2014 in connection with its proportionate share of the Marquand’s income from the sale of approximately 40% of its units during the quarter. In addition, during the nine months ended September 30, 2014, the Company recorded $2,254 of income in connection with its proportionate share of the sale of a commercial unit at 10 Madison Square Park West (f/k/a 1107 Broadway). New Valley recorded equity income of $526 and $656 for the three and nine months ended September 30, 2013. During the nine months ended September 30, 2014, New Valley made capital contributions totaling $27,154, primarily related to 101 Murray Street, 23-10 Queens Plaza South and a new investment, 125 Greenwich Street. New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's investment percentage did not change. During the nine months ended September 30, 2014, New Valley and received distributions of $7,791. During the nine months ended September 30, 2013, New Valley made capital contributions totaling $23,984 primarily related to its investment in 101 Murray Street, and received distributions of $2,593. New Valley's maximum exposure to loss as a result of its investments in condominium and mixed use developments was $100,786 at September 30, 2014.

Apartment Buildings:

Apartment buildings investments range in ownership percentage from 7.5% to 16.4%. New Valley recorded net equity losses of $87 and $111 for the three months ended September 30, 2014 and 2013, respectively, related to the apartment portfolios. New Valley recorded equity losses of $251 and $394 for nine months ended September 30, 2014 and 2013, respectively, primarily related to an apartment portfolio. New Valley received distributions of $375 and $250 during the nine months ended September 30, 2014 and 2013, respectively, related to an apartment portfolio. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $18,856 at September 30, 2014.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. During the three and nine months ended September 30, 2014, New Valley recorded net equity losses of $2,053 and $4,224. New Valley made capital contributions totaling $1,973 for the nine months ended September 30, 2014, primarily related to Park Lane Hotel. New Valley made capital contributions totaling $21,992 for the nine months ended September 30, 2013, primarily related to the initial investment in Park Lane Hotel. New Valley's maximum exposure to loss as a result of its investments in hotels was $27,655 at September 30, 2014.

Other:

Other investments in real estate ventures relate to an investment in a mortgage company and an insurance company partially owned by Douglas Elliman.

Real Estate Held for Sale:

The components of “Real estate held for sale, net” were as follows:

	September 30, 2014		December 31, 2013
Escena, net	$	10,643	$	10,625
Indian Creek	—		10,286
Real estate held for sale, net	$	10,643	$	20,911

Escena.  In October 2013, the Company sold 200 of the 867 residential lots. The remaining project consists of 667 residential lots, consisting of both single family and multi-family lots, an 18-hole golf course, clubhouse restaurant and golf shop, and a seven-acre site approved for a 450-room hotel.

The assets of "Escena, net" are as follows:

	September 30, 2014			December 31, 2013
Land and land improvements	$	8,930		$	8,930
Building and building improvements	1,832			1,530
Other	1,577			1,577
	12,339			12,037
Less accumulated depreciation	(1,696		)	(1,412		)
	$	10,643		$	10,625

The Company recorded an operating loss of $804 and $845 for the three months ended September 30, 2014 and 2013, respectively, from Escena. The Company recorded an operating loss of $571 and $769 for the nine months ended September 30, 2014 and 2013, respectively, from Escena.

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

In May 2014, the Indian Creek property was sold for $14,400 and New Valley received a distribution of approximately $7,100. New Valley recognized income of approximately $2,400 from the sale for the nine months ended September 30, 2014.

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Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [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. 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 that 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”). With the commencement of new cases, the defense costs and the risks relating to the unpredictability of litigation increase. The future financial impact of the risks and expenses of litigation are not quantifiable. For the nine months ended September 30, 2014 and 2013, Liggett incurred tobacco product liability legal expenses and other litigation costs totaling $7,282 and $7,334, respectively. The 2013 costs exclude a charge of $86,213 associated with the Engle progeny settlement discussed below.

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending 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 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 $5,093 in bonds as of September 30, 2014.

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. In several cases, plaintiffs 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. 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 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 7: (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 reasonably 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. A number of the judgments have been affirmed on appeal and satisfied by the defendants. As of October 27, 2014, 19Engle progeny cases where Liggett was a defendant at trial resulted in verdicts. Thirteen verdicts were returned in favor of the plaintiffs and six in favor of Liggett. Excluding the Lukacs case, which was tried in 2002, seven years before the trials of Engle progeny cases commenced, the compensatory verdicts against Liggett have ranged from $1 to $3,600. In certain cases, the judgments entered have been joint and several with other defendants. In three of the cases, punitive damages were awarded against Liggett. Except as discussed in this Note 7 regarding the cases where an adverse verdict was entered against Liggett and that remain 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.

Although Liggett has generally been successful in managing litigation, litigation is subject to uncertainty and significant challenges remain, including with respect to the remaining 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. 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 any of the remaining 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, including the remaining Engle progeny cases. As of September 30, 2014, Liggett (and in certain cases the Company) had, on an individual basis, settled 144Engle progeny cases for approximately $1,170 in the aggregate. There were no settlements in the third quarter of 2014. In addition, in October 2013, Liggett announced a settlement of the claims of over 4,900Engle progeny plaintiffs (see Engle Progeny Settlement below).

Individual Actions

As of September 30, 2014, there were 48 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 September 30, 2014:

State	Number of Cases
Florida	30
New York	8
Maryland	4
Louisiana	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, 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

Engle Case. 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 a result, Liggett and the Company, and other cigarette manufacturers, were named defendants in thousands of Engle progeny cases in both federal and state courts in Florida. Although the Company was not named as a defendant in the Engle case, it was named as a defendant in substantially all of the Engle progeny cases where Liggett was named as a defendant.

Engle Progeny Settlement. On October 23, 2013, the Company entered into a settlement with approximately 4,900Engle progeny plaintiffs and their counsel. Pursuant to the terms of the settlement, Liggett agreed to pay a total of approximately $110,000, with approximately $61,600 paid in a lump sum and the balance to be paid in installments over 14 years. In exchange, the claims of over 4,900 plaintiffs were dismissed with prejudice against the Company and Liggett. In 2013 the Company recorded a charge of $86,213 in connection with the settlement. Of this amount, $25,213 is related to certain payments discounted to their present value because the timing and amounts of such payments are fixed and determinable. The present value of the installment payments was computed using an 11% annual discount rate. The installment payments total approximately $48,000 on an undiscounted basis. The Company’s future payments will be approximately $3,500 per annum through 2028, with a cost of living increase beginning in 2021.

Notwithstanding the comprehensive nature of the Engle Progeny Settlement, approximately 330 plaintiffs' claims remain outstanding. Therefore, the Company and Liggett may still be subject to periodic adverse judgments which could have a material adverse affect on the Company's consolidated financial position, results of operations and cash flows.

As of October 27, 2014, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages	Liggett Punitive Damages	Status
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	None	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	$156	None	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	$1,350	None	Liggett satisfied the judgment and the case is concluded.
April 2010	Clay v. R.J. Reynolds	Escambia	$349	$1,000	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 which was denied. Both sides sought discretionary review from the Florida Supreme Court. The appeal is stayed pending the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	$225	None	Affirmed by the Fourth District Court of Appeal. Discretionary review from the Florida Supreme Court was denied. Liggett satisfied the judgment and the case is concluded, other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett.
January 2012	Ward v. R.J. Reynolds	Escambia	$1	None	Liggett satisfied the merits judgment and other than an issue regarding attorneys' fees, the case is concluded.
May 2012	Calloway v. R.J. Reynolds	Broward	$1,947	$7,600	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. 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. Affirmed by the First District Court of Appeal, but, the court certified an issue of conflict with another case. The defendants sought discretionary review by the Florida Supreme Court. The appeal is stayed pending the outcome of Hess.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	$205	None	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	$3,479	None	Liggett settled its portion of the judgment for $1,500 and the case is concluded.
August 2014	Irimi v. R.J. Reynolds	Broward	$31	None	The verdict has not been reduced to a judgment. Post trial motions are pending.
October 2014	Lambert v. R.J. Reynolds	Pinellas	$3,600	$9,500	The verdict has not been reduced to a judgment. Post trial motions are pending.
Total Damages Awarded:			$28,804	$18,100
Amounts paid or compromised:			$(17,978)	$(1,000)
Damages remaining on Appeal:			$10,826	$17,100

Through September 30, 2014, Liggett has paid $20,040, including interest and legal fees, to satisfy the judgments in six Engle progeny cases (Lukacs, Campbell, Douglas, Clay,Ward and Rizzuto). The Tullo judgment was satisfied on October 22, 2014. Liggett paid $272, including interest.

The Company's potential range of loss in the Putney, Calloway, Buchanan, Cohen, Irimi and Lambert cases is between $0 and $27,926 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 7, the Company is unable to determine a range of loss related to the remaining Engle progeny cases. Other than $272 accrued for Tullo, no amounts have been expensed or accrued in the accompanying condensed consolidated financial statements for the cases described above. 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.

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 has led to other adverse rulings by other state appellate courts.

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 the Rey case, a state court 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' further appellate efforts were unsuccessful.

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. This was the first time the Florida Supreme Court addressed the merits of an Engle progeny case. In October 2013, the United States Supreme Court declined to review the decision and Liggett satisfied the judgment. Recently, the United States Supreme Court declined to review the decisions in several other Engle progeny cases.

In Hess, a case pending in Broward County, the jury returned a verdict finding that decedent relied to his detriment on an omission by the defendant before May 5, 1982 (twelve years prior to the filing of the Engle Complaint).  Defendant moved for judgment as a matter of law on plaintiff’s fraudulent concealment claim on the basis that the claim was barred by Florida’s statute of repose.  The trial court denied the motion and was reversed by the Fourth District Court of Appeal, which held that any fraud committed before May 5, 1982 is barred.  This decision conflicts with decisions from other district courts of appeal and is before the Florida Supreme Court pursuant to its conflict jurisdiction.  Oral argument occurred on April 30, 2014. A decision is pending.

Liggett Only Cases.  There are currently five cases pending where Liggett is the only remaining 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 after it was removed by the court. The motion was granted and Liggett appealed. There has been no recent activity in the other two Individual Actions. Trial in Lambert, an Engle progeny case, concluded on September 30, 2014 and resulted in a jury verdict against Liggett for $13,100. Post trial motions are pending. The other Engle progeny case is not currently set for trial. Cases where Liggett is the only defendant could increase as a result of the remaining Engle progeny cases.

Class Actions

As of September 30, 2014, 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 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, allege they were exposed to secondhand smoke from cigarettes that were manufactured by the defendants, including Liggett, and suffered injury as a result of that exposure. The plaintiffs seek to recover an unspecified amount of compensatory and punitive damages. No class certification hearing has been held. In June 2013, plaintiffs’ counsel moved for an indefinite stay of the case.  The defendants did not oppose the stay and it was entered by the court.

In February 1998, in Parsons v. AC & S Inc., 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 due to the December 2000 bankruptcy of three of the defendants.

In February 2000, in Smith v. Philip Morris, a case pending in Kansas, a class was commenced against cigarette manufacturers alleging they 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 2014, the court of appeals affirmed the lower court's decision. On August 18, 2014, plaintiffs submitted a petition for review to the Kansas Supreme Court. A decision is pending.

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. After two mistrials, 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 1969, should have included instructions on how to use them. The issue of damages was reserved for further proceedings that have not yet been scheduled. Final judgment as to liability was issued in October 2013, after which the plaintiffs filed a notice of appeal to the West Virginia Supreme Court of Appeals. The defendants did not appeal the verdict in favor of the plaintiffs on the "failure to instruct" claim which impacted less than 30 plaintiffs. 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 September 30, 2014, there was one remaining 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. In June 2014, the court approved a consent agreement between the defendants and the Department of Justice regarding the "corrective statements" to be issued by the defendants. The implementation of the "corrective statements" is uncertain as the defendants are appealing the specific language of the statements.

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 September 30, 2014, there were 16Engle progeny cases scheduled for trial through September 30, 2015, where Liggett (and in many cases, the Company) is a named defendant. 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 3.3% of the total cigarettes sold in the United States in 2013. 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, 2013, Liggett pre-paid $95,000 of its 2013 MSA obligation. On April 15, 2014, Liggett and Vector Tobacco paid approximately $16,300 for the balance of their 2013 MSA obligation.

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 - 2013 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 allocation of the NPM Adjustment to the payments made by the manufacturers for the benefit of that Settling State.

For 2003 - 2013, 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 in many cases Vector Tobacco) paid subject to dispute, 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 involving the application of the NPM Adjustment for 2003 and whether it 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.

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. In exchange the OPMs and SPMs agreed to a 20% reduction in amounts recovered for the NPM Adjustment for 2003. 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 for 2003. Substantive hearings commenced in April 2012 and were completed in June 2013.

In December 2012, the Participating Manufacturers entered into a “term sheet” with 20 Settling States setting out terms for settlement of the NPM Adjustment for 2003 - 2012 and addressing the NPM Adjustment with respect to those states for future years. Certain of the non-settling states objected to the settlement. In March 2013, the arbitration panel entered a Stipulated Partial Settlement and Award which, among other things, overruled the objections of the non-settling states and directed the independent auditor to implement certain terms of the term sheet effective with the 2013 MSA payments. In May 2013, two additional states joined the settlement. In June 2014, two additional states joined the settlement.Several non-settling states are attempting to vacate the settlement award by filing state court actions. In Idaho, a trial court denied that state's motion to vacate, and the state noticed an appeal of that denial. In Colorado, a trial court also denied that state’s motion to vacate; Colorado has not filed an appeal, and the time period for appeal has passed. 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-settling states' challenges.

As a result of the settlement, in the first nine months of 2013 Liggett recognized income of $6,947. Finally, Liggett received credits of $1,733 in April 2014 from these settling states related to the 2013 NPM Adjustment. The remaining NPM Adjustment accrual of $25,809 at September 30, 2014 relates to the disputed amounts Liggett withheld from the non-settling states for 2004 - 2010, which may be subject to payment, with interest, if Liggett loses the disputes for those years. Approximately $24,400 currently remains in the disputed payments accounts relating to the 2011, 2012 and 2013 NPM Adjustment dispute with the non-settling states.

In September 2013, the panel issued its decisions with respect to the 15 states that did not enter into the Stipulated Partial Settlement and Award, finding that six states did not diligently enforce their MSA escrow statutes in 2003. As a result of this ruling Liggett recognized income of $5,987 including interest, in the third quarter of 2013. All six of the states that were found to be non-diligent filed motions in state court seeking to vacate or reduce the amount of the arbitration award. A trial court in one of those states, Pennsylvania, rejected the state's motion to vacate the award but granted its motion to reduce the award. As a result, in April 2014, Liggett received a credit in the amount of $6,441 for the 2003 NPM Adjustment (as calculated by the independent auditor). It subsequently reimbursed the six states 20% of that credit, pursuant to the agreement discussed above, bringing its net recovery to $5,152, which is approximately $1,315 lower than the amount Liggett believes it’s entitled to. Subsequent to the April 15, 2014 MSA payment date, a state court in Missouri ruled similarly to the ruling in Pennsylvania. As such, Liggett's 2003 NPM credit adjustment could be reduced by an additional $521. In June 2014, Kentucky and Indiana agreed to settle the dispute. As a result, Liggett recognized income of approximately $1,400 in the second quarter of 2014. The Participating Manufacturers, including Liggett, appealed the Pennsylvania and Missouri decisions. If Liggett is unsuccessful in its appeals or if other states are successful with respect to any such motions, the amount of the 2003 NPM Adjustment and any interest or earnings to which Liggett is entitled could be lower than the amounts described above and Liggett would be obligated to pay the difference.

Disputes over the NPM Adjustments for 2004-2013 remain to be arbitrated with the states that have not joined the settlement.

"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 re-calculated 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.

In December 2012, the parties arbitrated the dispute before a panel of three arbitrators. In February 2013, the arbitrators ruled that the limitations provisions of the MSA precluded the independent auditor from recalculating Liggett's grandfathered market share ("GFMS") 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, calculated on a net basis, should be increased by a factor of 1.25%.  Liggett filed a motion seeking correction 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 sought additional relief from the panel declaring that any adjustment ordered by the panel is not limited by the four years limitations set forth in the MSA.

A hearing on the motions was held on September 16, 2014. On October 8, 2014 the panel issued its Corrected Final Award, which eliminated the 1.25% adjustment increase and reaffirmed that Liggett is entitled to have its GFMS calculated on a “gross” basis (1.645%). Instead of the 1.25% adjustment increase the panel determined that the independent auditor shall compute Liggett’s market share for all years after March 30, 2000 on a “net” basis but adjust that computation to approximate “gross” market share by using actual returned product data for each year. Liggett plans to work with the independent auditor to determine the amount owed for years 2001 - 2013. Liggett had previously accrued $8,500 for this matter.

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. 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 reasonably predict the outcome of the litigation pending or threatened against Liggett or the Company. Litigation is subject to many uncertainties. Liggett has been found liable in several Engle progeny cases and in Individual Actions, several of 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. Except as discussed in this Note 7, 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 the MSA and tobacco litigation for the nine months ended September 30, 2014 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, 2014	$	25,348		$	59,310		$	84,658		$	27,571		$	27,058		$	54,629
Expenses	83,159			2,041			85,200			—			—			—
NPM Settlement adjustment	—			—			—			(1,419		)	—			(1,419		)
Change in MSA obligations capitalized as inventory	(917		)	—			(917		)	—			—			—
Payments	(16,343		)	(61,822		)	(78,165		)	—			—			—
Reclassification from non-current liabilities	343			3,575			3,918			(343		)	(3,575		)	(3,918		)
Interest on withholding	—			203			203			—			1,546			1,546
Balance as of September 30, 2014	$	91,590		$	3,307		$	94,897		$	25,809		$	25,029		$	50,838

The activity in the Company's accruals for the MSA and tobacco litigation for the nine months ended September 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	87,770			62,872			150,642			—			25,219			25,219
NPM Settlement adjustment	(5,987		)	—			(5,987		)	(13,489		)	—			(13,489		)
Change in MSA obligations capitalized as inventory	675			—			675			—			—			—
Payments	(34,077		)	(1,685		)	(35,762		)	—			—			—
Reclassification from non-current liabilities	3,520			223			3,743			(3,520		)	(223		)	(3,743		)
Interest on withholding	—			321			321			—			150			150
Balance as of September 30, 2013	$	84,871		$	63,201		$	148,072		$	35,630		$	27,008		$	62,638

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.

Liggett Vector Brands entered into an 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. The agreement expires in 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. To secure its potential obligations under the agreement, Liggett Vector Brands posted a $100 letter of credit and agreed to fund up to an additional $400. In the third quarter of 2013, Liggett paid $83 for obligations under this program, and therefore, is only committed to fund an additional $317 over the letter of credit. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at September 30, 2014.

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 Consolidating Financial Information Balance Sheets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 380,416	$ 234,466	$ 260,461	$ 405,855
Investment securities available for sale	333,883	172,534
Accounts receivable - trade, net	13,607	12,159
Intercompany receivables	0	0
Inventories	100,874	93,496
Deferred income taxes	25,540	50,479
Income taxes receivable, net	14,812	0
Restricted assets	2,780	1,785
Other current assets	34,226	23,392
Total current assets	906,138	588,311
Property, plant and equipment, net	86,622	79,258
Real estate held for sale, net	10,643	20,911
Long-term investments accounted for at cost	32,239	20,788
Long-term investments accounted for under the equity method	13,977	8,595
Investments in real estate ventures	154,281	128,202
Investments in consolidated subsidiaries	0	0
Restricted assets	12,063	11,981
Deferred income taxes	70,316	51,474
Goodwill, trademarks and other intangible assets, net	268,141	271,111
Prepaid pension costs	28,165	26,080
Other assets	60,798	53,553
Total assets	1,643,383	1,260,264	1,120,955
Current liabilities:
Current portion of notes payable and long-term debt	101,158	151,577
Current portion of fair value of derivatives embedded within convertible debt	2,996	19,128
Current portion of employee benefits	939	939
Accounts payable	10,845	10,260
Intercompany payables	0	0
Accrued promotional expenses	20,010	18,655
Income taxes payable, net	3,174	6,423
Accrued excise and payroll taxes payable, net	861	11,621
Litigation accruals and current payments due under the Master Settlement Agreement	94,897	84,658
Deferred income taxes	57,763	45,734
Accrued interest	17,721	21,968
Other current liabilities	34,256	34,147
Total current liabilities	344,620	405,110
Notes payable, long-term debt and other obligations, less current portion	857,107	540,766
Fair value of derivatives embedded within convertible debt	180,474	92,934
Non-current employee benefits	48,608	47,917
Deferred income taxes	165,726	137,650
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	54,715	57,496
Total liabilities	1,651,250	1,281,873
Commitments and contingencies
Total Vector Group Ltd. stockholders' deficiency	(89,990)	(95,036)
Non-controlling interest	82,123	73,427
Total stockholders' deficiency	(7,867)	(21,609)
Total liabilities and stockholders' deficiency	1,643,383	1,260,264
Parent/Issuer [Member]
Current assets:
Cash and cash equivalents	257,309	151,342	249,851	401,344
Investment securities available for sale	274,249	114,886
Accounts receivable - trade, net	0	0
Intercompany receivables	472	509
Inventories	0	0
Deferred income taxes	21,497	45,578
Income taxes receivable, net	23,429	0
Restricted assets	0	0
Other current assets	478	513
Total current assets	577,434	312,828
Property, plant and equipment, net	2,896	3,641
Real estate held for sale, net	0	0
Long-term investments accounted for at cost	31,541	20,041
Long-term investments accounted for under the equity method	13,977	8,595
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	478,744	410,442
Restricted assets	1,707	1,895
Deferred income taxes	56,586	35,000
Goodwill, trademarks and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	47,873	38,374
Total assets	1,210,758	830,816
Current liabilities:
Current portion of notes payable and long-term debt	88,169	112,275
Current portion of fair value of derivatives embedded within convertible debt	2,996	19,128
Current portion of employee benefits	0	0
Accounts payable	902	1,509
Intercompany payables	0	0
Accrued promotional expenses	0	0
Income taxes payable, net	0	16,870
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	44,164	32,309
Accrued interest	17,721	21,968
Other current liabilities	5,131	6,103
Total current liabilities	159,083	210,162
Notes payable, long-term debt and other obligations, less current portion	847,318	524,182
Fair value of derivatives embedded within convertible debt	180,474	92,934
Non-current employee benefits	32,562	31,462
Deferred income taxes	80,046	65,759
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,265	1,353
Total liabilities	1,300,748	925,852
Commitments and contingencies
Total Vector Group Ltd. stockholders' deficiency	(89,990)	(95,036)
Non-controlling interest	0	0
Total stockholders' deficiency	(89,990)	(95,036)
Total liabilities and stockholders' deficiency	1,210,758	830,816
Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	19,498	11,812	9,884	3,776
Investment securities available for sale	59,634	57,648
Accounts receivable - trade, net	11,231	10,154
Intercompany receivables	158	0
Inventories	100,874	93,496
Deferred income taxes	4,043	4,901
Income taxes receivable, net	0	10,447
Restricted assets	1,366	1,060
Other current assets	12,676	12,579
Total current assets	209,480	202,097
Property, plant and equipment, net	62,940	55,093
Real estate held for sale, 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 real estate ventures	0	0
Investments in consolidated subsidiaries	0	0
Restricted assets	10,356	10,086
Deferred income taxes	8,174	12,766
Goodwill, trademarks and other intangible assets, net	107,511	107,511
Prepaid pension costs	28,165	26,080
Other assets	10,595	10,126
Total assets	437,221	423,759
Current liabilities:
Current portion of notes payable and long-term debt	12,781	39,013
Current portion of fair value of derivatives embedded within convertible debt	0	0
Current portion of employee benefits	939	939
Accounts payable	4,778	4,136
Intercompany payables	0	39
Accrued promotional expenses	20,010	18,655
Income taxes payable, net	11,791	0
Accrued excise and payroll taxes payable, net	861	11,621
Litigation accruals and current payments due under the Master Settlement Agreement	94,897	84,658
Deferred income taxes	13,599	13,425
Accrued interest	0	0
Other current liabilities	9,232	10,495
Total current liabilities	168,888	182,981
Notes payable, long-term debt and other obligations, less current portion	9,517	12,573
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	16,046	16,455
Deferred income taxes	39,867	37,602
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	51,133	54,924
Total liabilities	285,451	304,535
Commitments and contingencies
Total Vector Group Ltd. stockholders' deficiency	151,770	119,224
Non-controlling interest	0	0
Total stockholders' deficiency	151,770	119,224
Total liabilities and stockholders' deficiency	437,221	423,759
Subsidiary Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	103,609	71,312	726	735
Investment securities available for sale	0	0
Accounts receivable - trade, net	2,376	2,005
Intercompany receivables	0	0
Inventories	0	0
Deferred income taxes	0	0
Income taxes receivable, net	0	0
Restricted assets	1,414	725
Other current assets	21,072	10,300
Total current assets	128,471	84,342
Property, plant and equipment, net	20,786	20,524
Real estate held for sale, net	10,643	20,911
Long-term investments accounted for at cost	698	747
Long-term investments accounted for under the equity method	0	0
Investments in real estate ventures	154,281	128,202
Investments in consolidated subsidiaries	0	0
Restricted assets	0	0
Deferred income taxes	5,556	3,708
Goodwill, trademarks and other intangible assets, net	160,630	163,600
Prepaid pension costs	0	0
Other assets	2,330	5,053
Total assets	483,395	427,087
Current liabilities:
Current portion of notes payable and long-term debt	208	289
Current portion of fair value of derivatives embedded within convertible debt	0	0
Current portion of employee benefits	0	0
Accounts payable	5,165	4,615
Intercompany payables	630	470
Accrued promotional expenses	0	0
Income taxes payable, net	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	0	0
Accrued interest	0	0
Other current liabilities	19,893	17,549
Total current liabilities	25,896	22,923
Notes payable, long-term debt and other obligations, less current portion	272	4,011
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	0	0
Deferred income taxes	45,813	34,289
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,317	1,219
Total liabilities	74,298	62,442
Commitments and contingencies
Total Vector Group Ltd. stockholders' deficiency	326,974	291,218
Non-controlling interest	82,123	73,427
Total stockholders' deficiency	409,097	364,645
Total liabilities and stockholders' deficiency	483,395	427,087
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	(630)	(509)
Inventories	0	0
Deferred income taxes	0	0
Income taxes receivable, net	(8,617)	(10,447)
Restricted assets	0	0
Other current assets	0	0
Total current assets	(9,247)	(10,956)
Property, plant and equipment, net	0	0
Real estate held for sale, 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 real estate ventures	0	0
Investments in consolidated subsidiaries	(478,744)	(410,442)
Restricted assets	0	0
Deferred income taxes	0	0
Goodwill, trademarks and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	0	0
Total assets	(487,991)	(421,398)
Current liabilities:
Current portion of notes payable and long-term debt	0	0
Current portion of fair value of derivatives embedded within convertible debt	0	0
Current portion of employee benefits	0	0
Accounts payable	0	0
Intercompany payables	(630)	(509)
Accrued promotional expenses	0	0
Income taxes payable, net	(8,617)	(10,447)
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	(9,247)	(10,956)
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	(9,247)	(10,956)
Commitments and contingencies
Total Vector Group Ltd. stockholders' deficiency	(478,744)	(410,442)
Non-controlling interest	0	0
Total stockholders' deficiency	(478,744)	(410,442)
Total liabilities and stockholders' deficiency	$ (487,991)	$ (421,398)

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Condensed Consolidating Financial Information Statements of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	$ 100,044	$ 55,244
Cash flows from investing activities:
Sale of investment securities	174,253	82,649
Purchase of investment securities	(312,919)	(129,483)
Proceeds from sale or liquidation of long-term investments	549	75
Purchase of long-term investments	(12,000)	(5,000)
Investments in real estate ventures	(29,378)	(45,977)
Purchase of subsidiaries	250
Investments in consolidated real estate businesses	0	(7,697)
Distributions from real estate ventures	5,540	2,463
Increase in cash surrender value of life insurance policies	(435)	(470)
Decrease (increase) in restricted assets	(1,108)	(553)
Repayments of notes receivable	933	9,460
Issuance of notes receivable	(250)	0
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	4	11
Capital expenditures	(20,746)	(8,686)
Net cash used in investing activities	(195,807)	(103,208)
Cash flows from financing activities:
Proceeds from debt issuance	413,918	454,200
Financing costs	(12,360)	(11,750)
Repayments of debt	(10,305)	(420,710)
Borrowings under revolver	645,894	723,578
Repayments on revolver	(673,866)	(736,007)
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(122,051)	(107,302)
Distributions to non-controlling interest	(4,861)
Proceeds from exercise of Vector options	4,407	528
Tax benefit of options exercised	937	33
Net cash provided by (used in) financing activities	241,713	(97,430)
Net increase (decrease) in cash and cash equivalents	145,950	(145,394)
Cash and cash equivalents, beginning of period	234,466	405,855
Cash and cash equivalents, end of period	380,416	260,461
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	23,189	44,750
Cash flows from investing activities:
Sale of investment securities	174,253	76,067
Purchase of investment securities	(310,934)	(117,982)
Proceeds from sale or liquidation of long-term investments	500	0
Purchase of long-term investments	(12,000)	(5,000)
Investments in real estate ventures	0	0
Purchase of subsidiaries	0
Investments in consolidated real estate businesses		0
Distributions from real estate ventures	0	0
Increase in cash surrender value of life insurance policies	0	(20)
Decrease (increase) in restricted assets	188	5
Repayments of notes receivable	35,933	9,460
Issuance of notes receivable	(35,000)
Investments in subsidiaries	(49,834)	(72,962)
Proceeds from sale of fixed assets	0	0
Capital expenditures	(11)	(2,320)
Net cash used in investing activities	(196,905)	(112,752)
Cash flows from financing activities:
Proceeds from debt issuance	408,750	450,000
Financing costs	(12,360)	(11,750)
Repayments of debt	0	(415,000)
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	(122,051)	(107,302)
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options	4,407	528
Tax benefit of options exercised	937	33
Net cash provided by (used in) financing activities	279,683	(83,491)
Net increase (decrease) in cash and cash equivalents	105,967	(151,493)
Cash and cash equivalents, beginning of period	151,342	401,344
Cash and cash equivalents, end of period	257,309	249,851
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	98,319	127,382
Cash flows from investing activities:
Sale of investment securities	0	6,582
Purchase of investment securities	(1,985)	(11,501)
Proceeds from sale or liquidation of long-term investments	0	0
Purchase of long-term investments	0	0
Investments in real estate ventures	0	0
Purchase of subsidiaries	0
Investments in consolidated real estate businesses		0
Distributions from real estate ventures	0	0
Increase in cash surrender value of life insurance policies	(435)	(450)
Decrease (increase) in restricted assets	(607)	(558)
Repayments of notes receivable	0	0
Issuance of notes receivable	0
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	4	11
Capital expenditures	(15,121)	(5,813)
Net cash used in investing activities	(18,144)	(11,729)
Cash flows from financing activities:
Proceeds from debt issuance	40,168	1,120
Financing costs	0	0
Repayments of debt	(41,485)	(5,604)
Borrowings under revolver	645,894	723,578
Repayments on revolver	(673,866)	(736,007)
Capital contributions received	10,800	13,250
Intercompany dividends paid	(54,000)	(105,882)
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash provided by (used in) financing activities	(72,489)	(109,545)
Net increase (decrease) in cash and cash equivalents	7,686	6,108
Cash and cash equivalents, beginning of period	11,812	3,776
Cash and cash equivalents, end of period	19,498	9,884
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	53,475	1,524
Cash flows from investing activities:
Sale of investment securities	0	0
Purchase of investment securities	0	0
Proceeds from sale or liquidation of long-term investments	49	75
Purchase of long-term investments	0	0
Investments in real estate ventures	(29,378)	(45,977)
Purchase of subsidiaries	250
Investments in consolidated real estate businesses		(7,697)
Distributions from real estate ventures	5,540	2,463
Increase in cash surrender value of life insurance policies	0	0
Decrease (increase) in restricted assets	(689)	0
Repayments of notes receivable	0	0
Issuance of notes receivable	(250)
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	0	0
Capital expenditures	(5,614)	(553)
Net cash used in investing activities	(30,592)	(51,689)
Cash flows from financing activities:
Proceeds from debt issuance	0	3,080
Financing costs	0	0
Repayments of debt	(3,820)	(106)
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	39,034	59,712
Intercompany dividends paid	(20,939)	(12,530)
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	(4,861)
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash provided by (used in) financing activities	9,414	50,156
Net increase (decrease) in cash and cash equivalents	32,297	(9)
Cash and cash equivalents, beginning of period	71,312	735
Cash and cash equivalents, end of period	103,609	726
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	(74,939)	(118,412)
Cash flows from investing activities:
Sale of investment securities	0	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 real estate ventures	0	0
Purchase of subsidiaries	0
Investments in consolidated real estate businesses		0
Distributions from real estate ventures	0	0
Increase in cash surrender value of life insurance policies	0	0
Decrease (increase) in restricted assets	0	0
Repayments of notes receivable	(35,000)	0
Issuance of notes receivable	35,000
Investments in subsidiaries	49,834	72,962
Proceeds from sale of fixed assets	0	0
Capital expenditures	0	0
Net cash used in investing activities	49,834	72,962
Cash flows from financing activities:
Proceeds from debt issuance	(35,000)	0
Financing costs	0	0
Repayments of debt	35,000	0
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	(49,834)	(72,962)
Intercompany dividends paid	74,939	118,412
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash provided by (used in) financing activities	25,105	45,450
Net increase (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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Condensed Consolidating Financial Information (Narrative) (Details) (USD $) In Thousands, unless otherwise specified			1 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 7.75% Senior Secured Notes Due 2021 [Member] Secured Debt [Member]	Feb. 28, 2013 Parent Company [Member] 7.75% Senior Secured Notes Due 2021 [Member] Secured Debt [Member]
Condensed Financial Statements, Captions [Line Items]
Subsidiary guarantors, percentage ownership	100.00%
Interest Rate		7.75%
Covenant, Indenture Threshold for Earnings for Payment of Dividends			$ 75,000
Covenant, Leverage Ratio Requirement			3.0
Covenant, Secured Leverage Ratio Requirement			1.5

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Summary of Significant Accounting Policies Basic Earnings Per Share (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Net income (loss) attributed to Vector Group Ltd.	$ 14,879	$ (36,891)	$ 25,384	$ (25,061)
Expense attributed to participating securities	(423)	0	(739)	0
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$ 14,456	$ (36,891)	$ 24,645	$ (25,061)

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Notes Payable, Long-Term Debt and Other Obligations (Convertible Notes Table) (Details) (Convertible Debt [Member], USD $)		0 Months Ended	9 Months Ended	0 Months Ended	1 Months Ended	9 Months Ended
	Oct. 29, 2013	Mar. 14, 2014 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	Sep. 30, 2014 6.75% Variable Interest Senior Convertible Note due 2014 - Vector	May 20, 2014 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Aug. 31, 2014 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2014 6.75% Variable Interest Senior Convertible Exchange Notes due 2014	Sep. 30, 2014 Variable Interest 7.50% Senior Convertible Debentures [Member]	Sep. 30, 2014 5.5% Variable Interest Senior Convertible Notes due 2020	Mar. 24, 2014 5.5% Variable Interest Senior Convertible Notes due 2020
Debt Instrument [Line Items]
Conversion basis amount	$ 1,000						$ 1,000,000
Conversion price			$ 11.22			$ 12.73	$ 16.78	$ 25.87	$ 25.8690190476
Note conversion (in shares)		2,121,479	89.1021	560,987	2,424,584	78.5381	59.5946	38.6563

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

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”), Zoom E-Cigs LLC ("Zoom"), New Valley LLC (“New Valley”) and other less significant subsidiaries. New Valley includes the accounts of Douglas Elliman Realty, LLC ("Douglas Elliman") 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. Zoom is engaged in the sale of electronic cigarettes in the United States. New Valley is engaged in the real estate business.

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, 2013 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

In connection with the December 13, 2013 acquisition of Douglas Elliman, the Company was required to disclose Douglas Elliman’s revenues and costs separately on the face of its condensed consolidated statements of operation. Consequently, the Company also revised the prior period in order to correctly present the gross revenues and costs of the other consolidated real estate investments as follows:

	Three Months Ended							Nine Months Ended
	September 30, 2013							September 30, 2013
	As Previously Reported		Revision			As Revised		As Previously Reported		Revision			As Revised
Revenues	$	271,516	$	(271,516	)	$	—	$	761,038	$	(761,038	)	$	—
Tobacco revenues	—		271,516			271,516		—		761,038			761,038
Real estate revenues	—		6,425			6,425		—		19,298			19,298
Total revenue	271,516		6,425			277,941		761,038		19,298			780,336
Cost of Sales	194,991		(194,991		)	—		548,377		(548,377		)	—
Tobacco cost of sales	—		194,991			194,991		—		548,377			548,377
Real estate cost of sales	—		5,844			5,844		—		16,080			16,080
Total cost of sales	194,991		5,844			200,835		548,377		16,080			564,457
Operating, selling, administrative and general expenses	$	25,897	$	581		$	26,478	$	74,697	$	3,218		$	77,915

In addition, the preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013.

During the second quarter of 2014, Douglas Elliman accounts payable as of December 31, 2013, was reduced by $16,434, while current liabilities were increased by $16,434. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

As a result of the amount of operating losses of Zoom as of September 30, 2014 when compared to the remaining components of Corporate and Other segment, the Company has reevaluated its operating segments and has separated Zoom’s operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

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' deficiency 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.

Revenue Recognition

Revenue Recognition:

Tobacco sales:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales. The Company’s accounting policy is to include federal excise taxes in revenues and cost of goods sold. Since the Company’s significant line of business is tobacco, the Company’s financial position and its results of operations and cash flows have been and could continue to be materially adversely affected by significant unit sales volume declines at the Company and industry levels, regulation, litigation and defense costs, increased tobacco costs or reductions in the selling price of cigarettes in the near term.

Real estate sales: Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, the transaction has been completed and collectibility of the resulting receivable is reasonably assured. Real estate and mortgage commissions earned by the Company’s real estate and mortgage brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commissions and royalties expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

E-Cigarettes:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales.

Earnings Per Share (“EPS”)

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 26, 2014. 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						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss) attributed to Vector Group Ltd.	$	14,879		$	(36,891	)	$	25,384		$	(25,061	)
Expense attributed to participating securities	(423		)	—			(739		)	—
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$	14,456		$	(36,891	)	$	24,645		$	(25,061	)

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Weighted-average shares for basic EPS	103,213,667	95,775,444	101,395,081	95,741,318
Plus incremental shares related to stock options and non-vested restricted stock	114,623	—	113,070	—
Weighted-average shares for basic and fully diluted EPS	103,328,290	95,775,444	101,508,151	95,741,318

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and nine months ended September 30, 2014 and 2013 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Number of stock options	N/A		524,887		N/A		524,887
Weighted-average exercise price	N/A		$	11.88	N/A		$	11.88
Weighted-average shares of non-vested restricted stock	N/A		55,125		N/A		55,125
Weighted-average expense per share	N/A		$	15.52	N/A		$	15.52
Weighted-average number of shares issuable upon   conversion of debt	32,599,702		29,726,047		31,257,300		29,726,047
Weighted-average conversion price	$	18.36	$	14.50	$	17.30	$	14.50

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.  At September 30, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $181,403 and $185,583.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $183,470 as of September 30, 2014. At December 31, 2013, the range of estimated fair market values of the Company's embedded derivatives was between $110,758 and $113,392.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $112,062 as of December 31, 2013.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

New Accounting Pronouncements

New Accounting Pronouncements:

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)-Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance to United States Generally Accepted Accounting Principles ("U.S. GAAP") about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 (1) defines the term substantial doubt, (2) requires an evaluation of every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plan, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. This ASU is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is the result of a convergence project between the FASB and the International Accounting Standards Board. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. The guidance in the ASU supersedes existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2016 with early application not permitted. The ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where the ASU is applied as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

In April 2014, the Financial Accounting Standards Board issued final guidance to change the criteria for reporting discontinued operations while enhancing disclosures in this area (ASU No. 2014-08). Under the new guidance, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as discontinued operations. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The guidance is effective for annual financial statements with fiscal years beginning on or after December 15, 2014 with early adoption permitted for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. The Company will adopt the guidance effective January 1, 2015 and the guidance is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In March 2014, the Emerging Issues Task Force (the “Task Force”) reached a final consensus to amend the accounting guidance for stock compensation tied to performance targets (Issue No. 13-D). The objective of this guidance is to clarify the accounting treatment of certain types of performance conditions in stock-based compensation awards, more specifically, when performance targets can be achieved after the requisite service period. The Task Force concluded that performance criteria subsequent to a service period vesting requirement should be treated as vesting conditions, and as a result, this type of performance condition may delay expense recognition until achievement of the performance target is probable. Issue No. 13-D will be effective for all entities for reporting periods (including interim periods) beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

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New Valley LLC (Tables)

9 Months Ended

Sep. 30, 2014

New Valley LLC [Abstract]

Schedule of summarized financial information

Summarized income statement information for Douglas Elliman for the three and nine months ended September 30, 2013, is presented below.

	Three Months Ended			Nine Months Ended
	September 30, 2013			September 30, 2013
Revenues	$	127,537		$	315,721
Costs and expenses	109,178			282,885
Depreciation expense	986			2,944
Amortization expense	56			167
Other income	(109		)	(512		)
Interest income, net	(14		)	(22		)
Income tax expense	442			684
Net income	$	16,998		$	29,575

Investments in real estate ventures

Investments in real estate ventures.  New Valley also holds equity investments in various real estate projects domestically and internationally. The components of “Investments in real estate ventures” were as follows:

	September 30, 2014		December 31, 2013
Milanosesto Holdings (f/k/a Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (f/k/a 1107 Broadway)	6,384		6,579
The Whitman	526		1,165
The Marquand	12,000		7,000
11 Beach Street	12,328		11,160
20 Times Square (f/k/a 701 Seventh Avenue)	12,481		11,148
101 Murray Street	25,269		19,256
160 Leroy Street	1,353		1,150
PUBLIC Chrystie House (f/k/a Chrystie Street)	3,180		2,048
25-19 43rd Avenue	733		—
Queens Plaza (f/k/a 23-10 Queens Plaza South)	12,590		8,058
8701 Collins Avenue	4,634		3,794
125 Greenwich Street	9,308		—
Condominium and Mixed Use Development	100,786		71,358
Maryland Portfolio	3,348		3,498
ST Portfolio	15,508		15,984
Apartment Buildings	18,856		19,482
Park Lane Hotel	18,097		19,514
Hotel Taiwana	6,850		7,428
Coral Beach and Tennis Club	2,708		2,964
Hotels	27,655		29,906
Other	1,947		2,419
Investments in real estate ventures	$	154,281	$	128,202

Schedule of consolidated real estate investments

The components of “Real estate held for sale, net” were as follows:

	September 30, 2014		December 31, 2013
Escena, net	$	10,643	$	10,625
Indian Creek	—		10,286
Real estate held for sale, net	$	10,643	$	20,911

Investment in Escena

The assets of "Escena, net" are as follows:

	September 30, 2014			December 31, 2013
Land and land improvements	$	8,930		$	8,930
Building and building improvements	1,832			1,530
Other	1,577			1,577
	12,339			12,037
Less accumulated depreciation	(1,696		)	(1,412		)
	$	10,643		$	10,625

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New Valley LLC Investment in Escena (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Escena [Member]	Sep. 30, 2013 Escena [Member]	Sep. 30, 2014 Escena [Member]	Sep. 30, 2013 Escena [Member]	Sep. 30, 2014 Escena [Member] New Valley LLC [Member]	Dec. 31, 2013 Escena [Member] New Valley LLC [Member]	Oct. 30, 2013 Escena [Member] New Valley LLC [Member] hole residential_unit acre room
Investment Holdings [Line Items]
Number of residential lots sold											200
Number of residential lots											867
Number of residential lots remaining											667
Number of holes in golf course											18
Area of land											7
Number of units in real estate property											450
Land and land improvements									$ 8,930	$ 8,930
Building and building improvements									1,832	1,530
Other									1,577	1,577
Total Investment in Escena before depreciation									12,339	12,037
Less accumulated depreciation									(1,696)	(1,412)
Investment in Escena, net									10,643	10,625
Operating income (loss)	$ 62,984	$ (37,285)	$ 166,014	$ 50,051	$ (804)	$ (845)	$ (571)	$ (769)

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Inventories [Line Items]
Leaf tobacco	$ 55,769	$ 49,140
Other raw materials	3,402	3,161
Work-in-process	606	353
Finished goods	63,628	67,201
E-Cigarettes	7,963	839
Inventories at current cost	131,368	120,694
LIFO adjustments	(30,494)	(27,198)
Inventory, net	100,874	93,496
Liggett [Member] | Leaf tobacco [Member]
Inventories [Line Items]
Purchase commitments	11,948
Liggett [Member] | E-Cigarettes [Member]
Inventories [Line Items]
Purchase commitments	$ 389

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Tax portion of revenues and cost of goods sold	$ 115,323	$ 121,787	$ 327,434	$ 343,294

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

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”), Zoom E-Cigs LLC ("Zoom"), New Valley LLC (“New Valley”) and other less significant subsidiaries. New Valley includes the accounts of Douglas Elliman Realty, LLC ("Douglas Elliman") 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. Zoom is engaged in the sale of electronic cigarettes in the United States. New Valley is engaged in the real estate business.

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, 2013 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 2013 financial information to conform to the 2014 presentation.

In connection with the December 13, 2013 acquisition of Douglas Elliman, the Company was required to disclose Douglas Elliman’s revenues and costs separately on the face of its condensed consolidated statements of operation. Consequently, the Company also revised the prior period in order to correctly present the gross revenues and costs of the other consolidated real estate investments as follows:

	Three Months Ended							Nine Months Ended
	September 30, 2013							September 30, 2013
	As Previously Reported		Revision			As Revised		As Previously Reported		Revision			As Revised
Revenues	$	271,516	$	(271,516	)	$	—	$	761,038	$	(761,038	)	$	—
Tobacco revenues	—		271,516			271,516		—		761,038			761,038
Real estate revenues	—		6,425			6,425		—		19,298			19,298
Total revenue	271,516		6,425			277,941		761,038		19,298			780,336
Cost of Sales	194,991		(194,991		)	—		548,377		(548,377		)	—
Tobacco cost of sales	—		194,991			194,991		—		548,377			548,377
Real estate cost of sales	—		5,844			5,844		—		16,080			16,080
Total cost of sales	194,991		5,844			200,835		548,377		16,080			564,457
Operating, selling, administrative and general expenses	$	25,897	$	581		$	26,478	$	74,697	$	3,218		$	77,915

In addition, the preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013.

During the second quarter of 2014, Douglas Elliman accounts payable as of December 31, 2013, was reduced by $16,434, while current liabilities were increased by $16,434. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

As a result of the amount of operating losses of Zoom as of September 30, 2014 when compared to the remaining components of Corporate and Other segment, the Company has reevaluated its operating segments and has separated Zoom’s operations from the Corporate and Other segment for previously reported 2014 periods and from the Tobacco segment for the previously reported 2013 periods. Thus, prior period information has been recast to conform to the current presentation. This change did not have an impact to the Company's historical consolidated results.

(b) Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statement of stockholders' deficiency 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) Revenue Recognition:

Tobacco sales:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales. The Company’s accounting policy is to include federal excise taxes in revenues and cost of goods sold. Since the Company’s significant line of business is tobacco, the Company’s financial position and its results of operations and cash flows have been and could continue to be materially adversely affected by significant unit sales volume declines at the Company and industry levels, regulation, litigation and defense costs, increased tobacco costs or reductions in the selling price of cigarettes in the near term.

Real estate sales: Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, the transaction has been completed and collectibility of the resulting receivable is reasonably assured. Real estate and mortgage commissions earned by the Company’s real estate and mortgage brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commissions and royalties expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

E-Cigarettes:  Revenues from sales are recognized upon the shipment of finished goods when title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sale price is determinable and collectibility is reasonably assured. The Company provides an allowance for expected sales returns, net of any related inventory cost recoveries. Certain sales incentives, including promotional price discounts, are classified as reductions of net sales.

(d) 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 26, 2014. 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						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss) attributed to Vector Group Ltd.	$	14,879		$	(36,891	)	$	25,384		$	(25,061	)
Expense attributed to participating securities	(423		)	—			(739		)	—
Net income (loss) attributed to Vector Group Ltd. available to common stockholders	$	14,456		$	(36,891	)	$	24,645		$	(25,061	)

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Weighted-average shares for basic EPS	103,213,667	95,775,444	101,395,081	95,741,318
Plus incremental shares related to stock options and non-vested restricted stock	114,623	—	113,070	—
Weighted-average shares for basic and fully diluted EPS	103,328,290	95,775,444	101,508,151	95,741,318

The following stock options, non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the three and nine months ended September 30, 2014 and 2013 but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Number of stock options	N/A		524,887		N/A		524,887
Weighted-average exercise price	N/A		$	11.88	N/A		$	11.88
Weighted-average shares of non-vested restricted stock	N/A		55,125		N/A		55,125
Weighted-average expense per share	N/A		$	15.52	N/A		$	15.52
Weighted-average number of shares issuable upon   conversion of debt	32,599,702		29,726,047		31,257,300		29,726,047
Weighted-average conversion price	$	18.36	$	14.50	$	17.30	$	14.50

(e) 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.  At September 30, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $181,403 and $185,583.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $183,470 as of September 30, 2014. At December 31, 2013, the range of estimated fair market values of the Company's embedded derivatives was between $110,758 and $113,392.  The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $112,062 as of December 31, 2013.  The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

(f) Other Income, Net:

Other income, net consists of:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014			2013		2014			2013
Gain on warrants	$	991		$	135	$	868		$	172
Interest income	1,476			2,647		3,665			4,123
Accretion of interest income from debt discount on notes receivable	11			81		87			704
Out-of-period adjustment	—			—		1,231			—
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—		2,335			—
Gain on long-term investment	—			—		—			142
Other (expense) income	(12		)	8		(19		)	10
Other income, net	$	2,466		$	2,871	$	8,167		$	5,151

The out-of-period adjustment, recording for the period ending March 31, 2014, related to a non-accrual of a receivable from Douglas Elliman in the fourth quarter of 2013 and would have increased the Company’s gain on acquisition of Douglas Elliman in 2013. The Company assessed the materiality of this error on all previously issued financial statements and concluded that the error was immaterial to all previously issued financial statements. The impact of correcting this error in the current year is not expected to be material to the Company’s 2014 consolidated financial statements.

(g) Goodwill, Trademarks and Other Intangible Assets:

The components of "Goodwill, trademarks and other intangible assets, net" were as follows:

	September 30, 2014		December 31, 2013
Intangible assets, net	$	7,649	$	11,919
Goodwill	72,976		71,681
Trademarks	80,005		80,000
Intangible asset associated with benefit under the Master Settlement Agreement	107,511		107,511
	$	268,141	$	271,111

The preliminary fair values of the assets acquired, liabilities assumed and the non-controlling interest recorded for Douglas Elliman as of December 13, 2013 were adjusted during the first quarter of 2014. Goodwill and current liabilities were reduced by $454 and $105, respectively, while intangible assets related to favorable lease agreements were increased by $559. The amounts are preliminary as management is still evaluating the valuations of certain assets acquired in the acquisition. These adjustments have been reflected in the Company's condensed consolidated balance sheet as of December 31, 2013.

(h) Restricted Stock Grant

On July 23, 2014, the Company granted its President and Chief Executive Officer an award of 1,050,000 shares of its Common Stock subject to service and performance-based vesting. The Award Shares will be issued pursuant to the terms of an agreement that provides that both a performance requirement and a continued employment requirement must be met over a seven-year performance period to earn vested rights with respect to the Award Shares. The maximum potential amount of the Award Shares reflects recognition of the CEO's contributions as CEO since January 1, 2006 and the value of his management and real estate expertise to the Company.

(i) New Accounting Pronouncements:

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)-Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance to United States Generally Accepted Accounting Principles ("U.S. GAAP") about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 (1) defines the term substantial doubt, (2) requires an evaluation of every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plan, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. This ASU is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is the result of a convergence project between the FASB and the International Accounting Standards Board. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. The guidance in the ASU supersedes existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2016 with early application not permitted. The ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where the ASU is applied as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

In April 2014, the Financial Accounting Standards Board issued final guidance to change the criteria for reporting discontinued operations while enhancing disclosures in this area (ASU No. 2014-08). Under the new guidance, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as discontinued operations. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The guidance is effective for annual financial statements with fiscal years beginning on or after December 15, 2014 with early adoption permitted for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. The Company will adopt the guidance effective January 1, 2015 and the guidance is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.

In March 2014, the Emerging Issues Task Force (the “Task Force”) reached a final consensus to amend the accounting guidance for stock compensation tied to performance targets (Issue No. 13-D). The objective of this guidance is to clarify the accounting treatment of certain types of performance conditions in stock-based compensation awards, more specifically, when performance targets can be achieved after the requisite service period. The Task Force concluded that performance criteria subsequent to a service period vesting requirement should be treated as vesting conditions, and as a result, this type of performance condition may delay expense recognition until achievement of the performance target is probable. Issue No. 13-D will be effective for all entities for reporting periods (including interim periods) beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard but does not anticipate it will have a material impact on the Company's consolidated financial statements or notes to the consolidated financial statements.

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Income (loss) before provision for income taxes	$ 31,669	$ (55,860)	$ 57,272	$ (34,348)
Income tax expense using estimated annual effective income tax rate	9,932	(22,763)	17,962	(13,997)
Changes in effective tax rates	(374)	1,181	0	1,159
Increase in unrecognized tax benefits	0	251	0	373
Impact of discrete items, net	1,305	0	1,944	816
Impact of discrete item associated with litigation settlement	0	2,362	0	2,362
Inclusion of tax liabilities from unincorporated entities	1,101	0	1,101	0
Income tax expense (benefit)	$ 11,964	$ (18,969)	$ 21,007	$ (9,287)

XML

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

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Notes payable, long-term debt and other obligations

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

	September 30, 2014			December 31, 2013
Vector:
7.75% Senior Secured Notes due 2021, including premium of $9,577 and $0	$	609,577		$	450,000
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $1,733 and $19,311*	23,267			30,689
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $2,713 and $25,944*	64,902			81,586
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $149,342 and $155,817*	80,658			74,183
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $101,667 and $0*	157,083			—
Liggett:
Revolving credit facility	2,452			30,424
Term loan under credit facility	3,663			3,884
Equipment loans	16,128			17,252
Other	535			4,325
Total notes payable, long-term debt and other obligations	958,265			692,343
Less:
Current maturities	(101,158		)	(151,577		)
Amount due after one year	$	857,107		$	540,766

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($885 at September 30, 2014 and $6,607 at December 31, 2013, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($2,110 at September 30, 2014 and $12,521 at December 31, 2013, respectively), the 5.50% Variable Interest Senior Convertible Debentures ($86,228 at September 30, 2014 and $0 at December 31, 2013, respectively), and the 7.50% Variable Interest Senior Convertible Notes ($94,247 at September 30, 2014 and $92,934 at December 31, 2013, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

Schedule of Shares of Common Stock per $1,000 Principal Amount due on Note

The conversion rates for all convertible debt outstanding as of September 30, 2014 are summarized below:

	September 30, 2014
	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	11.22	89.1021
6.75% Variable Interest Senior Convertible Exchange Notes due 2014	$	12.73	78.5381
7.5% Variable Interest Senior Convertible Notes due 2019	$	16.78	59.5946
5.5% Variable Interest Senior Convertible Debentures due 2020	$	25.87	38.6563

Non-Cash Interest Expense - Vector

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Amortization of debt discount	$	14,277	$	9,620	$	41,180	$	25,432
Amortization of deferred finance costs	1,147		549		2,910		1,593
Loss on extinguishment of 11% Senior Secured Notes	—		—		—		3,638
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Note converted	—		—		3,679		—
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Exchange Notes converted	994		—		1,433		—
	$	16,418	$	10,169	$	49,202	$	30,663

Fair Value of Notes Payable and Long-Term Debt

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	958,265	$	1,445,085	$	692,343	$	1,006,562

XML

Summary of Significant Accounting Policies Textuals (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended				0 Months Ended					3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 28, 2012	Jul. 23, 2014 Performance Shares [Member] Chief Executive Officer [Member]	Sep. 30, 2014 Minimum [Member]	Dec. 31, 2013 Minimum [Member]	Sep. 30, 2014 Maximum [Member]	Dec. 31, 2013 Maximum [Member]	Jun. 30, 2014 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]	Mar. 31, 2014 New Valley LLC [Member] Douglas Elliman Realty LLC [Member]
Summary of Investment Holdings [Line Items]
Goodwill adjustment													$ (454)
Current liabilities adjustment												16,434	(105)
Accounts payable adjustment												(16,434)
Intangible assets adjustment													559
Intangible assets, net	7,649		7,649		11,919
Stock dividend paid to company stockholders						5.00%
Fair market value of embedded derivatives at the midpoint of the inputs	183,470		183,470		112,062			181,403	110,758	185,583	113,392
Real estate revenue	153,748	6,425	415,280	19,298
Cost of real estate	96,442	5,844	261,531	16,080
Operating, selling, administrative and general expenses	$ 69,431	$ 26,478	$ 200,431	$ 77,915
Common stock granted							1,050,000
Period of recognition							7 years

XML

Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2014

Condensed Financial Information of Parent Company Only Disclosure [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. Such release provisions are as follows:

• the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor; and

• the satisfaction of the requirements for legal defeasance or the satisfaction and discharge of the indenture.

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 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.

At September 30, 2014, management believed that the Company was in compliance with all covenants under the indentures of the 7.75% Senior Secured Notes.

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2014
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	257,309		$	19,498	$	103,609	$	—		$	380,416
Investment securities available for sale	274,249			59,634		—		—			333,883
Accounts receivable - trade, net	—			11,231		2,376		—			13,607
Intercompany receivables	472			158		—		(630		)	—
Inventories	—			100,874		—		—			100,874
Deferred income taxes	21,497			4,043		—		—			25,540
Income taxes receivable, net	23,429			—		—		(8,617		)	14,812
Restricted assets	—			1,366		1,414		—			2,780
Other current assets	478			12,676		21,072		—			34,226
Total current assets	577,434			209,480		128,471		(9,247		)	906,138
Property, plant and equipment, net	2,896			62,940		20,786		—			86,622
Real estate held for sale, net	—			—		10,643		—			10,643
Long-term investments accounted for at cost	31,541			—		698		—			32,239
Long-term investments accounted for under the equity method	13,977			—		—		—			13,977
Investments in real estate ventures	—			—		154,281		—			154,281
Investments in consolidated subsidiaries	478,744			—		—		(478,744		)	—
Restricted assets	1,707			10,356		—		—			12,063
Deferred income taxes	56,586			8,174		5,556		—			70,316
Goodwill, trademarks and other intangible assets, net	—			107,511		160,630		—			268,141
Prepaid pension costs	—			28,165		—		—			28,165
Other assets	47,873			10,595		2,330		—			60,798
Total assets	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	88,169		$	12,781	$	208	$	—		$	101,158
Current portion of fair value of derivatives embedded within convertible debt	2,996			—		—		—			2,996
Current portion of employee benefits	—			939		—		—			939
Accounts payable	902			4,778		5,165		—			10,845
Intercompany payables	—			—		630		(630		)	—
Accrued promotional expenses	—			20,010		—		—			20,010
Income taxes payable, net	—			11,791		—		(8,617		)	3,174
Accrued excise and payroll taxes payable, net	—			861		—		—			861
Litigation accruals and current payments due under the Master Settlement Agreement	—			94,897		—		—			94,897
Deferred income taxes	44,164			13,599		—		—			57,763
Accrued interest	17,721			—		—		—			17,721
Other current liabilities	5,131			9,232		19,893		—			34,256
Total current liabilities	159,083			168,888		25,896		(9,247		)	344,620
Notes payable, long-term debt and other obligations, less current portion	847,318			9,517		272		—			857,107
Fair value of derivatives embedded within convertible debt	180,474			—		—		—			180,474
Non-current employee benefits	32,562			16,046		—		—			48,608
Deferred income taxes	80,046			39,867		45,813		—			165,726
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,265			51,133		2,317		—			54,715
Total liabilities	1,300,748			285,451		74,298		(9,247		)	1,651,250
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(89,990		)	151,770		326,974		(478,744		)	(89,990		)
Non-controlling interest	—			—		82,123		—			82,123
Total stockholders' (deficiency) equity	(89,990		)	151,770		409,097		(478,744		)	(7,867		)
Total liabilities and stockholders' deficiency	$	1,210,758		$	437,221	$	483,395	$	(487,991	)	$	1,643,383

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2013
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	151,342		$	11,812	$	71,312	$	—		$	234,466
Investment securities available for sale	114,886			57,648		—		—			172,534
Accounts receivable - trade, net	—			10,154		2,005		—			12,159
Intercompany receivables	509			—		—		(509		)	—
Inventories	—			93,496		—		—			93,496
Deferred income taxes	45,578			4,901		—		—			50,479
Income taxes receivable, net	—			10,447		—		(10,447		)	—
Restricted assets	—			1,060		725		—			1,785
Other current assets	513			12,579		10,300		—			23,392
Total current assets	312,828			202,097		84,342		(10,956		)	588,311
Property, plant and equipment, net	3,641			55,093		20,524		—			79,258
Real estate held for sale, net	—			—		20,911		—			20,911
Long-term investments accounted for at cost	20,041			—		747		—			20,788
Long-term investments accounted for under the equity method	8,595			—		—		—			8,595
Investments in real estate ventures	—			—		128,202		—			128,202
Investments in consolidated subsidiaries	410,442			—		—		(410,442		)	—
Restricted assets	1,895			10,086		—		—			11,981
Deferred income taxes	35,000			12,766		3,708		—			51,474
Goodwill, trademarks and other intangible assets, net	—			107,511		163,600		—			271,111
Prepaid pension costs	—			26,080		—		—			26,080
Other assets	38,374			10,126		5,053		—			53,553
Total assets	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	112,275		$	39,013	$	289	$	—		$	151,577
Current portion of fair value of derivatives embedded within convertible debt	19,128			—		—		—			19,128
Current portion of employee benefits	—			939		—		—			939
Accounts payable	1,509			4,136		4,615		—			10,260
Intercompany payables	—			39		470		(509		)	—
Accrued promotional expenses	—			18,655		—		—			18,655
Income taxes payable, net	16,870			—		—		(10,447		)	6,423
Accrued excise and payroll taxes payable, net	—			11,621		—		—			11,621
Litigation accruals and current payments due under the Master Settlement Agreement	—			84,658		—		—			84,658
Deferred income taxes	32,309			13,425		—		—			45,734
Accrued interest	21,968			—		—		—			21,968
Other current liabilities	6,103			10,495		17,549		—			34,147
Total current liabilities	210,162			182,981		22,923		(10,956		)	405,110
Notes payable, long-term debt and other obligations, less current portion	524,182			12,573		4,011		—			540,766
Fair value of derivatives embedded within convertible debt	92,934			—		—		—			92,934
Non-current employee benefits	31,462			16,455		—		—			47,917
Deferred income taxes	65,759			37,602		34,289		—			137,650
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,353			54,924		1,219		—			57,496
Total liabilities	925,852			304,535		62,442		(10,956		)	1,281,873
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(95,036		)	119,224		291,218		(410,442		)	(95,036		)
Non-controlling interest	—			—		73,427		—			73,427
Total stockholders' (deficiency) equity	(95,036		)	119,224		364,645		(410,442		)	(21,609		)
Total liabilities and stockholders' deficiency	$	830,816		$	423,759	$	427,087	$	(421,398	)	$	1,260,264

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	266,328		$	153,748		$	(200	)	$	419,876
Expenses:
Cost of sales	—			190,794			96,442			—			287,236
Operating, selling, administrative and general expenses	6,099			22,395			41,137			(200		)	69,431
Litigation settlement and judgment expense	—			225			—			—			225
Management fee expense	—			2,467			—			(2,467		)	—
Operating (loss) income	(6,099		)	50,447			16,169			2,467			62,984
Other income (expenses):
Interest expense	(43,005		)	(1,026		)	(3		)	—			(44,034		)
Change in fair value of derivatives embedded within convertible debt	7,127			—			—			—			7,127
Acceleration of interest expense related to debt conversion	(994		)	—			—			—			(994		)
Equity income from real estate ventures	—			—			3,258			—			3,258
Equity income on long-term investments	829			—			—			—			829
Gain on sale of investment securities available for sale	33			—			—			—			33
Equity income in consolidated subsidiaries	36,428			—			—			(36,428		)	—
Management fee income	2,467			—			—			(2,467		)	—
Other, net	1,936			296			234			—			2,466
Income (loss) before provision for income taxes	(1,278		)	49,717			19,658			(36,428		)	31,669
Income tax benefit (expense)	16,157			(21,491		)	(6,630		)	—			(11,964		)
Net income	14,879			28,226			13,028			(36,428		)	19,705
Net income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Net income attributed to Vector Group Ltd.	14,879			28,226			8,202			(36,428		)	14,879
Comprehensive income attributed to non-controlling interest	—			—			(4,826		)	—			(4,826		)
Comprehensive income attributed to Vector Group	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	271,516		$	6,425		$	—		$	277,941
Expenses:
Cost of sales	—			194,991			5,844			—			200,835
Operating, selling, administrative and general expenses	4,968			19,990			1,520			—			26,478
Litigation judgment expense	—			87,913			—			—			87,913
Management fee expense	—			2,377			—			(2,377		)	—
Operating (loss) income	(4,968		)	(33,755		)	(939		)	2,377			(37,285		)
Other income (expenses):
Interest expense	(32,978		)	(602		)	(3		)	—			(33,583		)
Change in fair value of derivatives embedded within convertible debt	2,800			—			—			—			2,800
Equity income from real estate ventures	—			—			9,489			—			9,489
Equity loss on long-term investments	(53		)	—			—			—			(53		)
Loss on sale of investment securities available for sale	(99		)	—			—			—			(99		)
Equity loss in consolidated subsidiaries	(11,514		)	—			—			11,514			—
Management fee income	2,377			—			—			(2,377		)	—
Other, net	603			2,270			(2		)	—			2,871
(Loss) income before provision for income taxes	(43,832		)	(32,087		)	8,545			11,514			(55,860		)
Income tax benefit (expense)	6,941			15,521			(3,493		)	—			18,969
Net (loss) income	(36,891		)	(16,566		)	5,052			11,514			(36,891		)
Comprehensive (loss) income	$	(28,536	)	$	(11,923	)	$	5,052		$	6,871		$	(28,536	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	758,645		$	415,280		$	(200	)	$	1,173,725
Expenses:
Cost of sales	—			544,024			261,531			—			805,555
Operating, selling, administrative and general expenses	17,315			66,270			117,046			(200		)	200,431
Litigation settlement and judgment expense	—			1,725			—			—			1,725
Management fee expense	—			7,402			—			(7,402		)	—
Operating (loss) income	(17,315		)	139,224			36,703			7,402			166,014
Other income (expenses):
Interest expense	(120,977		)	(3,265		)	(40		)	612			(123,670		)
Change in fair value of derivatives embedded within convertible debt	7,447			—			—			—			7,447
Acceleration of interest expense related to debt conversion	(5,112		)	—			—			—			(5,112		)
Equity income from real estate ventures	—			—			3,002			—			3,002
Equity income on long-term investments	1,462			—			—			—			1,462
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income in consolidated subsidiaries	96,554			—			—			(96,554		)	—
Management fee income	7,402			—			—			(7,402		)	—
Other, net	3,702			780			4,297			(612		)	8,167
(Loss) income before provision for income taxes	(26,875		)	136,739			43,962			(96,554		)	57,272
Income tax benefit (expense)	52,259			(57,846		)	(15,420		)	—			(21,007		)
Net income	25,384			78,893			28,542			(96,554		)	36,265
Net income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Net income attributed to Vector Group Ltd.	25,384			78,893			17,661			(96,554		)	25,384
Comprehensive income attributed to non-controlling interest	—			—			(10,881		)	—			(10,881		)
Comprehensive income attributed to Vector Group Ltd.	$	41,218		$	79,026		$	17,661		$	(96,687	)	$	41,218

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2013
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	761,038		$	19,298		$	—		$	780,336
Expenses:
Cost of sales	—			548,377			16,080			—			564,457
Operating, selling, administrative and general expenses	16,350			56,939			4,626			—			77,915
Litigation judgment expense	—			87,913									87,913
Management fee expense	—			7,131			—			(7,131		)	—
Operating (loss) income	(16,350		)	60,678			(1,408		)	7,131			50,051
Other income (expenses):
Interest expense	(97,661		)	(1,374		)	(10		)	—			(99,045		)
Change in fair value of derivatives embedded within convertible debt	8,299			—			—			—			8,299
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from real estate ventures	—			—			16,774			—			16,774
(Loss) gain on sale of investment securities available for sale	(296		)	5,406			—			—			5,110
Equity income on long-term investments	770			—			—			—			770
Equity income in consolidated subsidiaries	52,051			—			—			(52,051		)	—
Management fee income	7,131			—			—			(7,131		)	—
Other, net	2,550			2,475			126			—			5,151
(Loss) income before provision for income taxes	(64,964		)	67,185			15,482			(52,051		)	(34,348		)
Income tax benefit (expense)	39,903			(24,270		)	(6,346		)	—			9,287
Net (loss) income	(25,061		)	42,915			9,136			(52,051		)	(25,061		)
Comprehensive (loss) income	$	(9,670	)	$	49,701		$	9,136		$	(58,837	)	$	(9,670	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	23,189		$	98,319		$	53,475		$	(74,939	)	$	100,044
Cash flows from investing activities:
Sale of investment securities	174,253			—			—			—			174,253
Purchase of investment securities	(310,934		)	(1,985		)	—			—			(312,919		)
Proceeds from sale or liquidation of long-term investments	500			—			49			—			549
Purchase of long-term investments	(12,000		)	—			—			—			(12,000		)
Investments in real estate ventures	—			—			(29,378		)	—			(29,378		)
Purchase of subsidiaries	—			—			(250		)	—			(250		)
Distributions from real estate ventures	—			—			5,540			—			5,540
Increase in cash surrender value of life insurance policies	—			(435		)	—			—			(435		)
Decrease (increase) in restricted assets	188			(607		)	(689		)	—			(1,108		)
Issuance of notes receivable	(35,000		)	—			(250		)	35,000			(250		)
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Proceeds from sale of fixed assets	—			4			—			—			4
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from debt issuance	408,750			40,168			—			(35,000		)	413,918
Financing costs	(12,360		)	—			—			—			(12,360		)
Repayments of debt	—			(41,485		)	(3,820		)	35,000			(10,305		)
Borrowings under revolver	—			645,894			—			—			645,894
Repayments on revolver	—			(673,866		)	—			—			(673,866		)
Capital contributions received	—			10,800			39,034			(49,834		)	—
Intercompany dividends paid	—			(54,000		)	(20,939		)	74,939			—
Dividends and distributions on common stock	(122,051		)	—			—			—			(122,051		)
Distributions to non-controlling interest	—			—			(4,861		)	—			(4,861		)
Proceeds from exercise of Vector options	4,407			—			—			—			4,407
Tax benefit of options exercised	937			—			—			—			937
Net cash provided by (used in) financing activities	279,683			(72,489		)	9,414			25,105			241,713
Net increase in cash and cash equivalents	105,967			7,686			32,297			—			145,950
Cash and cash equivalents, beginning of period	151,342			11,812			71,312			—			234,466
Cash and cash equivalents, end of period	$	257,309		$	19,498		$	103,609		$	—		$	380,416

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	44,750		$	127,382		$	1,524		$	(118,412	)	$	55,244
Cash flows from investing activities:
Sale of investment securities	76,067			6,582			—			—			82,649
Purchase of investment securities	(117,982		)	(11,501		)	—			—			(129,483		)
Proceeds from sale of or liquidation of long-term investments	—			—			75			—			75
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(45,977		)	—			(45,977		)
Investments in real estate held for sale	—			—			(7,697		)	—			(7,697		)
Distributions from real estate ventures	—			—			2,463			—			2,463
Increase in cash surrender value of life insurance policies	(20		)	(450		)	—			—			(470		)
Decrease (increase) in restricted assets	5			(558		)	—			—			(553		)
Repayments of notes receivable	9,460			—			—			—			9,460
Proceeds from sale of fixed assets	—			11			—			—			11
Investments in subsidiaries	(72,962		)	—			—			72,962			—
Capital expenditures	(2,320		)	(5,813		)	(553		)	—			(8,686		)
Net cash used in investing activities	(112,752		)	(11,729		)	(51,689		)	72,962			(103,208		)
Cash flows from financing activities:
Proceeds from debt issuance	450,000			1,120			3,080			—			454,200
Financing costs	(11,750		)	—			—			—			(11,750		)
Repayments of debt	(415,000		)	(5,604		)	(106		)	—			(420,710		)
Borrowings under revolver	—			723,578			—			—			723,578
Repayments on revolver	—			(736,007		)	—			—			(736,007		)
Capital contributions received	—			13,250			59,712			(72,962		)	—
Intercompany dividends paid	—			(105,882		)	(12,530		)	118,412			—
Dividends and distributions on common stock	(107,302		)	—			—			—			(107,302		)
Proceeds from exercise of Vector options	528			—			—			—			528
Tax benefits from exercise of Vector options	33			—			—			—			33
Net cash (used in) provided by financing activities	(83,491		)	(109,545		)	50,156			45,450			(97,430		)
Net (decrease) increase in cash and cash equivalents	(151,493		)	6,108			(9		)	—			(145,394		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	249,851		$	9,884		$	726		$	—		$	260,461