Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidated Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to Securities and Exchange Commission (“SEC”) Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Affiliates Whose Securities Collateralize an Issue Registered or Being Registered.” Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company. The guarantees are subject to certain automatic release provisions. Relief from the financial statement requirements under Rule 3-10 is being provided because the Company’s guarantee release provisions are considered customary pursuant to Section 2510.5 of the SEC Division of Corporation Finance Financial Reporting Manual. 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 Company has outstanding $450,000 principal amount of its 7.75% Senior Secured Notes due 2021 that are guaranteed subject to certain customary automatic release provisions described above on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of its cigarette businesses. (See Note 9.) The notes are not guaranteed by any of the Company’s subsidiaries engaged in the real estate businesses conducted through its subsidiary New Valley LLC.

Presented herein are Condensed Consolidating Balance Sheets as of December 31, 2014 and 2013 and the related Condensed Consolidating Statements of Operations and Cash Flows for the years ended December 31, 2014, 2013 and 2012 of Vector Group Ltd. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors). The Company does not believe that the separate financial statements and related footnote disclosures concerning the Guarantors would provide any additional information that would be material to investors making an investment decision.

The indenture contains covenants that restrict the payment of dividends by the Company if the Company’s consolidated earnings before interest, taxes, depreciation and amortization (“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 the Company’s Leverage Ratio and its Secured Leverage Ratio, as defined in the indenture, exceed 3.0 and 1.5, respectively. The Company’s Leverage Ratio is defined in the indenture as the ratio of the Company’s and the guaranteeing subsidiaries’ total debt less the fair market value of the Company’s cash, investments in marketable securities and long-term investments to Consolidated EBITDA, as defined in the indenture. The Company’s Secured Leverage Ratio is defined in the indenture in the same manner as the Leverage Ratio, except that secured indebtedness is substituted for indebtedness.

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2014
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	211,751		$	9,724	$	104,890	$	—		$	326,365
Investment securities available for sale	278,010			68,033		—		—			346,043
Accounts receivable - trade, net	—			18,024		5,304		—			23,328
Intercompany receivables	795			267		—		(1,062		)	—
Inventories	—			90,323		—		—			90,323
Deferred income taxes	24,541			4,651		—		—			29,192
Income taxes receivable, net	1,055			463		21		1,743			3,282
Restricted assets	—			1,181		1,414		—			2,595
Other current assets	899			9,133		26,686		—			36,718
Total current assets	517,051			201,799		138,315		681			857,846
Property, plant and equipment, net	2,648			61,149		20,315		—			84,112
Real estate held for sale, net	—			—		10,643		—			10,643
Long-term investments	39,594			—		698		—			40,292
Investments in real estate ventures	—			—		163,460		—			163,460
Investments in consolidated subsidiaries	518,963			—		—		(518,963		)	—
Restricted assets	1,707			10,306		—		—			12,013
Deferred income taxes	37,117			8,393		5,619		—			51,129
Goodwill and other intangible assets, net	—			107,511		162,461		—			269,972
Prepaid pension costs	—			25,032		—		—			25,032
Other assets	45,904			10,743		2,246		—			58,893
Total assets	$	1,162,984		$	424,933	$	503,757	$	(518,282	)	$	1,573,392
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Current portion of notes payable and long-term debt	$	25,000		$	27,248	$	392	$	—		$	52,640
Current portion of fair value of derivatives embedded within convertible debt	884			—		—		—			884
Current portion of employee benefits	—			931		—		—			931
Intercompany payables	—			—		1,062		(1,062		)	—
Income taxes payable, net	—			—		—		1,743			1,743
Litigation accruals and current payments due under the Master Settlement Agreement	—			29,471		—		—			29,471
Deferred income taxes	41,993			15,678		—		—			57,671
Other current liabilities	36,653			58,677		31,425		—			126,755
Total current liabilities	104,530			132,005		32,879		681			270,095
Notes payable, long-term debt and other obligations, less current portion	852,560			8,120		31		—			860,711
Fair value of derivatives embedded within convertible debt	168,502			—		—		—			168,502
Non-current employee benefits	32,842			16,472		—		—			49,314
Deferred income taxes	60,656			40,694		44,289		—			145,639
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	921			51,775		4,383		—			57,079
Total liabilities	1,220,011			249,066		81,582		681			1,551,340
Commitments and contingencies
Stockholders’ (deficiency) equity attributed to Vector Group Ltd.	(57,027		)	175,867		343,096		(518,963		)	(57,027		)
Non-controlling interest	—			—		79,079		—			79,079
Total Stockholders’ (deficiency) equity	(57,027		)	175,867		422,175		(518,963		)	22,052
Total liabilities and stockholders’ equity	$	1,162,984		$	424,933	$	503,757	$	(518,282	)	$	1,573,392

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	28,636			—		747		—			29,383
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 and other intangible assets,net	—			107,511		167,597		—			275,108
Prepaid pension costs	—			26,080		—		—			26,080
Other assets	38,374			10,126		5,053		—			53,553
Total assets	$	830,816		$	423,759	$	431,084	$	(421,398	)	$	1,264,261
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
Intercompany payables	—			39		470		(509		)	—
Income taxes payable, net	16,870			—		—		(10,447		)	6,423
Litigation accruals and current payments due under the Master Settlement Agreement	—			84,658		—		—			84,658
Deferred income taxes	32,309			13,425		—		—			45,734
Other current liabilities	29,580			44,907		22,164		—			96,651
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		5,216		—			61,493
Total liabilities	925,852			304,535		66,439		(10,956		)	1,285,870
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	$	431,084	$	(421,398	)	$	1,264,261

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,030,157		$	561,467		$	(309	)	$	1,591,315
Expenses:
Cost of sales	—			743,032			354,028			—			1,097,060
Operating, selling, administrative and general expenses	23,312			90,208			165,181			(309		)	278,392
Litigation judgment expense	—			2,475			—			—			2,475
Management fee expense	—			9,870			—			(9,870		)	—
Operating (loss) income	(23,312		)	184,572			42,258			9,870			213,388
Other income (expenses):
Interest expense	(157,321		)	(4,241		)	(41		)	612			(160,991		)
Change in fair value of derivatives embedded within convertible debt	19,409			—			—			—			19,409
Acceleration of interest expense related to debt conversion	(5,205		)	—			—			—			(5,205		)
Equity income from real estate ventures	—			—			4,103			—			4,103
Equity income on long-term investments	1,242			—			—			—			1,242
Loss on sale of investment securities available for sale	(11		)	—			—			—			(11		)
Equity income in consolidated subsidiaries	124,001			—			—			(124,001		)	—
Management fee income	9,870			—			—			(9,870		)	—
Other, net	5,334			1,044			4,786			(612		)	10,552
(Loss) income before provision for income taxes	(25,993		)	181,375			51,106			(124,001		)	82,487
Income tax benefit (expense)	62,971			(78,794		)	(17,428		)	—			(33,251		)
Net income	36,978			102,581			33,678			(124,001		)	49,236
Net income attributed to non-controlling interest	—			—			(12,258		)	—			(12,258		)
Net income attributed to Vector Group Ltd.	36,978			102,581			21,420			(124,001		)	36,978
Comprehensive income attributed to non-controlling interest	—			—			(12,258		)	—			(12,258		)
Comprehensive income attributed to Vector Group Ltd.	$	48,658		$	102,669		$	21,420		$	(124,089	)	$	48,658

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,014,341		$	65,580		$	—		$	1,079,921
Expenses:
Cost of sales	—			729,393			37,638			—			767,031
Operating, selling, administrative and general expenses	22,835			77,780			12,133			—			112,748
Litigation judgment expense	—			88,106			—			—			88,106
Management fee expense	—			9,508			—			(9,508		)	—
Operating (loss) income	(22,835		)	109,554			15,809			9,508			112,036
Other income (expenses):
Interest expense	(130,417		)	(1,716		)	(14		)	—			(132,147		)
Change in fair value of derivatives embedded within convertible debt	18,935			—			—			—			18,935
Acceleration of interest expense related to debt conversion	(12,414		)	—			—			—			(12,414		)
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity income from real estate ventures	—			—			22,925			—			22,925
Equity income on long-term investments	2,066			—			—			—			2,066
(Loss) gain on investment securities available for sale	(272		)	5,424			—			—			5,152
Gain on acquisition of Douglas Elliman	—			—			60,842			—			60,842
Equity income in consolidated subsidiaries	144,689			—			—			(144,689		)	—
Management fee income	9,508			—			—			(9,508		)	—
Other, net	4,439			2,763			348			—			7,550
(Loss) income before provision for income taxes	(7,759		)	116,025			99,910			(144,689		)	63,487
Income tax benefit (expense)	46,703			(30,758		)	(40,740		)	—			(24,795		)
Net income	38,944			85,267			59,170			(144,689		)	38,692
Net loss attributed to non-controlling interest	—			—			252			—			252
Net income attributed to Vector Group Ltd.	38,944			85,267			59,422			(144,689		)	38,944
Comprehensive loss attributed to non-controlling interest	—			—			252			—			252
Comprehensive income	$	72,072		$	102,344		$	59,422		$	(161,766	)	$	72,072

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Year Ended December 31, 2012
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Revenues	$	—		$	1,084,546		$	10,987		$	—		$	1,095,533
Expenses:
Cost of sales	—			823,452			8,876			—			832,328
Operating, selling, administrative and general expenses	26,039			78,054			4,179			—			108,272
Management fee expense	—			9,163			—			(9,163		)	—
Operating (loss) income	(26,039		)	173,877			(2,068		)	9,163			154,933
Other income (expenses):
Interest expense	(105,465		)	(4,614		)	(23		)	—			(110,102		)
Changes in fair value of derivatives embedded within convertible debt	(7,476		)	—			—			—			(7,476		)
Acceleration of interest expense related to debt conversion	(14,960		)	—			—			—			(14,960		)
Equity income from real estate ventures	—			—			29,764			—			29,764
Gain on investment securities available for sale	—			1,640			—			—			1,640
Equity loss on long-term investments	(1,261		)	—			—			—			(1,261		)
Equity income in consolidated subsidiaries	120,036			—			—			(120,036		)	—
Management fee income	9,163			—			—			(9,163		)	—
Other, net	1,022			21			136			—			1,179
(Loss) Income before provision for income taxes	(24,980		)	170,924			27,809			(120,036		)	53,717
Income tax benefit (expense)	55,602			(67,294		)	(11,403		)	—			(23,095		)
Net income	30,622			103,630			16,406			(120,036		)	30,622
Comprehensive income	$	24,031		$	104,520		$	16,406		$	(120,926	)	$	24,031

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	61,779		$	83,671		$	62,656		$	(100,730	)	$	107,376
Cash flows from investing activities:
Proceeds from the sale or maturity of investment securities	156,604			—			—			—			156,604
Purchase of investment securities	(299,417		)	(6,314		)	—			—			(305,731		)
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	—			—			(40,916		)	—			(40,916		)
Distributions from investment in real estate ventures	—			—			7,309			—			7,309
Increase in cash surrender value of life insurance policies	—			(484		)	—			—			(484		)
Decrease (increase) in restricted assets	188			(371		)	(689		)	—			(872		)
Issuance of notes receivable	(35,000		)	—			(8,250		)	35,000			(8,250		)
Investments in subsidiaries	(85,278		)	—			—			85,278			—
Proceeds from sale of businesses and assets	—			4			—			—			4
Purchase of subsidiaries	—			—			(750		)	—			(750		)
Repayment of notes receivable	36,867			—			4,850			(35,000		)	6,717
Capital expenditures	(15		)	(16,466		)	(6,923		)	—			(23,404		)
Purchase of preferred securities	—			—			(1,000		)	—			(1,000		)
Pay down of investment securities	790			—			—			—			790
Net cash used in investing activities	(236,761		)	(23,631		)	(46,320		)	85,278			(221,434		)
Cash flows from financing activities:
Proceeds from issuance of debt	408,750			40,164			—			(35,000		)	413,914
Deferred financing costs	(12,360		)	—			—			—			(12,360		)
Repayments of debt	—			(43,724		)	(3,877		)	35,000			(12,601		)
Borrowings under revolver	—			886,130			—			—			886,130
Repayments on revolver	—			(898,788		)	—			—			(898,788		)
Capital contributions received	—			15,270			70,008			(85,278		)	—
Intercompany dividends paid	—			(61,180		)	(39,550		)	100,730			—
Distributions on common stock	(167,328		)	—			—			—			(167,328		)
Distributions to non-controlling interest	—			—			(9,339		)	—			(9,339		)
Proceeds from exercise of Vector options	5,151			—			—			—			5,151
Tax benefit of options exercised	1,178			—			—			—			1,178
Net cash provided by (used in) financing activities	235,391			(62,128		)	17,242			15,452			205,957
Net increase (decrease) in cash and cash equivalents	60,409			(2,088		)	33,578			—			91,899
Cash and cash equivalents, beginning of period	151,342			11,812			71,312			—			234,466
Cash and cash equivalents, end of period	$	211,751		$	9,724		$	104,890		$	—		$	326,365

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2013
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by (used in) operating activities	$	71,730		$	115,829		$	(16,239	)	$	(119,294	)	$	52,026
Cash flows from investing activities:
Proceeds from the sale or maturity of investment securities	111,127			6,602			—			—			117,729
Purchase of investment securities	(159,463		)	(11,501		)	—			—			(170,964		)
Proceeds from sale of or liquidation of long-term investments	500			—			80			—			580
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(75,731		)	—			(75,731		)
Distributions from investments in real estate ventures	—			—			3,142			—			3,142
Increase in cash surrender value of life insurance policies	(144		)	(484		)	—			—			(628		)
Decrease in restricted assets	3			1,078			—			—			1,081
Issuance of notes receivable	—			—			(8,600		)	—			(8,600		)
Investments in subsidiaries	(155,961		)	—			—			155,961			—
Proceeds from sale of businesses and assets	35			13			—			—			48
Cash acquired in Douglas Elliman consolidation	—			—			116,935			—			116,935
Purchase of subsidiaries	—			—			(67,616		)	—			(67,616		)
Repayments of notes receivable	10,347			—			—			—			10,347
Capital expenditures	(2,297		)	(9,784		)	(1,194		)	—			(13,275		)
Net cash used in investing activities	(200,853		)	(14,076		)	(32,984		)	155,961			(91,952		)
Cash flows from financing activities:
Proceeds from issuance of debt	450,000			4,687			3,080			—			457,767
Deferred financing costs	(11,750		)	—			—			—			(11,750		)
Repayments of debt	(415,000		)	(7,466		)	(115		)	—			(422,581		)
Borrowings under revolver	—			978,788			—			—			978,788
Repayments on revolver	—			(977,794		)	—			—			(977,794		)
Capital contributions received	—			13,950			142,011			(155,961		)	—
Intercompany dividends paid	—			(105,882		)	(13,412		)	119,294			—
Distributions on common stock	(144,711		)	—			—			—			(144,711		)
Distributions to non-controlling interest	—			—			(11,764		)	—			(11,764		)
Proceeds from exercise of Vector options	544			—			—			—			544
Tax benefit of options exercised	38			—			—			—			38
Net cash (used in) provided by financing activities	(120,879		)	(93,717		)	119,800			(36,667		)	(131,463		)
Net (decrease) increase in cash and cash equivalents	(250,002		)	8,036			70,577			—			(171,389		)
Cash and cash equivalents, beginning of period	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of period	$	151,342		$	11,812		$	71,312		$	—		$	234,466

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2012
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Net cash provided by (used in) operating activities	$	118,399		$	133,308		$	(2,772	)	$	(164,849	)	$	84,086
Cash flows from investing activities:
Proceeds from sale or maturity of investment securities	—			3,831			—			—			3,831
Purchase of investment securities	—			(5,647		)	—			—			(5,647		)
Proceeds from sale or liquidation of long-term investments	—			—			72			—			72
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(33,375		)	—			(33,375		)
Distributions from investments in real estate ventures	—			—			49,221			—			49,221
Increase in cash surrender value of life insurance policies	(425		)	(482		)	—			—			(907		)
Decrease (increase) in restricted assets	263			(1,393		)	—			—			(1,130		)
Issuance of notes receivable	(383		)	—			—			—			(383		)
Proceeds from sale of business and assets	432			12			—			—			444
Investments in subsidiaries	(31,209		)	—			—			31,209			—
Capital expenditures	(1,520		)	(9,339		)	(406		)	—			(11,265		)
Net cash (used in) provided by investing activities	(37,842		)	(13,018		)	15,512			31,209			(4,139		)
Cash flows from financing activities:
Proceeds from issuance of debt	230,000			14,033			42			—			244,075
Repayments of debt	—			(19,125		)	(133		)	—			(19,258		)
Deferred financing charges	(11,164		)	(315		)	—			—			(11,479		)
Borrowings under revolver	—			1,074,050			—			—			1,074,050
Repayments on revolver	—			(1,066,092		)	—			—			(1,066,092		)
Capital contributions received	—			6,991			24,218			(31,209		)	—
Intercompany dividends paid	—			(128,544		)	(36,305		)	164,849			—
Distributions on common stock	(137,114		)	—			—			—			(137,114		)
Proceeds from issuance of Vector stock	611			—			—			—			611
Proceeds from exercise of Vector options	140			—			—			—			140
Tax benefit of options exercised	52			—			—			—			52
Net cash provided by (used in) by financing activities	82,525			(119,002		)	(12,178		)	133,640			84,985
Net increase in cash and cash equivalents	163,082			1,288			562			—			164,932
Cash and cash equivalents, beginning of period	238,262			2,488			173			—			240,923
Cash and cash equivalents, end of period	$	401,344		$	3,776		$	735		$	—		$	405,855