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, 2015

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.

x Large accelerated filer	o  Accelerated filer	o  Non-accelerated filer	o  Smaller 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 November 9, 2015, Vector Group Ltd. had 122,592,329 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, 2015 and December 31, 2014	2
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and September 30, 2014	3
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2015 and September 30, 2014	4
Condensed Consolidated Statements of Stockholders' (Deficiency) Equity for the nine months ended September 30, 2015	5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and September 30, 2014	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3. Quantitative and Qualitative Disclosures About Market Risk	63
Item 4. Controls and Procedures	63
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	65
Item 1A. Risk Factors	65
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6. Exhibits	69
SIGNATURE	70

1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	September 30, 2015			December 31, 2014
ASSETS:
Current assets:
Cash and cash equivalents	$	246,347		$	326,365
Investment securities available for sale	288,376			346,043
Accounts receivable - trade, net	20,112			23,328
Inventories	90,695			90,323
Income taxes receivable, net	—			3,282
Restricted assets	2,834			2,595
Other current assets	37,824			36,718
Total current assets	686,188			828,654
Property, plant and equipment, net	76,367			84,112
Real estate held for sale, net	22,963			10,643
Long-term investments	53,648			40,292
Investments in real estate ventures	194,052			163,460
Restricted assets	18,647			12,013
Goodwill and other intangible assets, net	265,480			269,972
Prepaid pension costs	27,440			25,032
Other assets	54,016			58,893
Total assets	$	1,398,801		$	1,493,071
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY:
Current liabilities:
Current portion of notes payable and long-term debt	$	7,957		$	52,640
Current portion of fair value of derivatives embedded within convertible debt	—			884
Current payments due under the Master Settlement Agreement	92,952			26,322
Current portion of employee benefits	931			931
Income taxes payable, net	186			1,743
Litigation accruals	7,640			3,149
Deferred income taxes, net	7,321			28,479
Other current liabilities	111,803			126,755
Total current liabilities	228,790			240,903
Notes payable, long-term debt and other obligations, less current portion	879,690			860,711
Fair value of derivatives embedded within convertible debt	149,739			168,502
Non-current employee benefits	49,913			49,314
Deferred income taxes, net	96,497			94,510
Payments due under the Master Settlement Agreement	20,094			25,809
Litigation accruals	24,072			25,700
Other liabilities	6,833			5,570
Total liabilities	1,455,628			1,471,019
Commitments and contingencies (Note 7)
Stockholders' (deficiency) equity:
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 250,000,000 shares authorized, 122,592,329 and 118,646,261 shares issued and 122,592,329 and 114,501,014 shares outstanding	12,259			11,450
Additional paid-in capital	—			—
Accumulated deficit	(163,914		)	(90,160		)
Accumulated other comprehensive income	9,868			34,540
Treasury shares, at cost, 0 and 4,145,247	—			(12,857		)
Total Vector Group Ltd. stockholders' deficiency	(141,787		)	(57,027		)
Non-controlling interest	84,960			79,079
Total stockholders' (deficiency) equity	(56,827		)	22,052
Total liabilities and stockholders' (deficiency) equity	$	1,398,801		$	1,493,071

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,
	2015			2014			2015			2014
Revenues:
Tobacco*	$	264,170		$	264,520		$	747,145		$	748,468
Real estate	185,563			153,748			478,841			415,280
E-Cigarettes	201			1,608			881			9,977
Total revenues	449,934			419,876			1,226,867			1,173,725
Expenses:
Cost of sales:
Tobacco*	174,418			189,728			506,315			537,667
Real estate	121,078			96,442			309,306			261,531
E-Cigarettes	421			1,066			1,518			6,357
Total cost of sales	295,917			287,236			817,139			805,555
Operating, selling, administrative and general expenses	79,114			69,431			232,737			200,431
Litigation settlement and judgment expense	3,750			225			5,843			1,725
Restructuring expenses	1,548			—			1,548			—
Operating income	69,605			62,984			169,600			166,014
Other income (expenses):
Interest expense	(32,898		)	(44,034		)	(96,405		)	(123,670		)
Change in fair value of derivatives embedded within convertible debt	7,044			7,127			18,760			7,447
Acceleration of interest expense related to debt conversion	—			(994		)	—			(5,112		)
Equity (loss) income from real estate ventures	(916		)	3,258			1,278			3,002
Equity (loss) income from investments	(579		)	829			(2,273		)	1,462
(Loss) gain on sale of investment securities available for sale	(821		)	33			12,018			(38		)
Impairment of investment securities available for sale	(12,211		)	—			(12,211		)	—
Other, net	133			2,466			3,554			8,167
Income before provision for income taxes	29,357			31,669			94,321			57,272
Income tax expense	13,508			11,964			37,551			21,007
Net income	15,849			19,705			56,770			36,265
Net income attributed to non-controlling interest	(3,644		)	(4,826		)	(5,741		)	(10,881		)
Net income attributed to Vector Group Ltd.	$	12,205		$	14,879		$	51,029		$	25,384
Per basic common share:
Net income applicable to common shares attributed to Vector Group Ltd.	$	0.10		$	0.13		$	0.42		$	0.23
Per diluted common share:
Net income applicable to common shares attributed to Vector Group Ltd.	$	0.10		$	0.13		$	0.42		$	0.23
Cash distributions and dividends declared per share	$	0.38		$	0.36		$	1.14		$	1.09

* Revenues and cost of sales include excise taxes of $112,773, $115,323, $319,044 and $327,434, 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 (LOSS) INCOME

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income	$	15,849		$	19,705		$	56,770		$	36,265
Net unrealized (losses) gains on investment securities available for sale:
Change in net unrealized (losses) gains	(50,067		)	19,184			(43,550		)	22,292
Net unrealized losses (gains) reclassified into net income	9,091			(33		)	(3,748		)	38
Net unrealized (losses) gains on investment securities available for sale	(40,976		)	19,151			(47,298		)	22,330
Net unrealized (losses) gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	—			(4,694		)	1,190			3,920
Net unrealized losses reclassified into net income	—			—			1,624			—
Net unrealized (losses) gains on long-term investments accounted for under the equity method	—			(4,694		)	2,814			3,920
Net change in forward contracts	15			16			47			48
Net change in pension-related amounts
Net loss arising during the year	—			—			1,607			—
Amortization of loss	229			147			750			442
Net change in pension-related amounts	229			147			2,357			442
Other comprehensive (loss) income	(40,732		)	14,620			(42,080		)	26,740
Income tax effect on:
Change in net unrealized (losses) gains on investment securities	20,702			(7,438		)	18,008			(9,218		)
Net unrealized losses (gains) reclassified into net income on investment securities	(3,759		)	13			1,550			(16		)
Change in unrealized (losses) gains on long-term investments accounted for under the equity method	—			1,933			(484		)	(1,621		)
Net unrealized losses reclassified into net income on long-term investments accounted for under the equity method	—			—			(672		)	—
Forward contracts	(6		)	(8		)	(19		)	(20		)
Pension-related amounts	(95		)	(105		)	(975		)	(31		)
Income tax provision on other comprehensive (loss) income	16,842			(5,605		)	17,408			(10,906		)
Other comprehensive (loss) income, net of tax	(23,890		)	9,015			(24,672		)	15,834
Comprehensive (loss) income	(8,041		)	28,720			32,098			52,099
Comprehensive income attributed to non-controlling interest	(3,644		)	(4,826		)	(5,741		)	(10,881		)
Comprehensive (loss) income attributed to Vector Group Ltd.	$	(11,685	)	$	23,894		$	26,357		$	41,218

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) EQUITY

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Vector Group Ltd. Stockholders' (Deficiency) Equity
						Additional						Accumulated Other
	Common Stock					Paid-In			Accumulated			Comprehensive			Treasury			Non-controlling
	Shares		Amount			Capital			Deficit			Income			Stock			Interest			Total
Balance, January 1, 2015	114,501,014		$	11,450		$	—		$	(90,160	)	$	34,540		$	(12,857	)	$	79,079		$	22,052
Net income	—		—			—			51,029			—			—			5,741			56,770
Total other comprehensive loss	—		—			—			—			(24,672		)	—			—			(24,672		)
Total comprehensive income	—		—			—			—			—			—			—			32,098
Distributions and dividends on common stock	—		—			(16,082		)	(124,199		)	—			—			—			(140,281		)
Surrender of shares in connection with restricted stock vesting	(83,411	)	(8		)	(2,075		)	—			—			—			—			(2,083		)
Effect of stock dividend	5,837,144		584			—			(584		)	—			—			—			—
Note conversions, net of taxes $367	2,227,552		223			25,299			—			—			—			—			25,522
Cancellation of treasury shares	—		—			(12,857		)	—			—			12,857			—			—
Exercise of stock options	110,030		10			1,311			—			—			—			—			1,321
Tax benefit of options exercised	—		—			756			—			—			—			—			756
Stock-based compensation	—		—			3,648			—			—			—			—			3,648
Contributions made by non-controlling interest	—		—			—			—			—			—			704			704
Distributions to non-controlling interest	—		—			—			—			—			—			(564		)	(564		)
Balance as of September 30, 2015	122,592,329		$	12,259		$	—		$	(163,914	)	$	9,868		$	—		$	84,960		$	(56,827	)

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, 2015			September 30, 2014
Net cash provided by operating activities	$	140,018		$	100,044
Cash flows from investing activities:
Sale of investment securities	161,029			173,046
Maturities of investment securities	2,653			517
Purchase of investment securities	(162,845		)	(312,919		)
Proceeds from sale or liquidation of long-term investments	182			549
Purchase of long-term investments	(10,000		)	(12,000		)
Investments in real estate ventures	(43,280		)	(29,378		)
Distributions from investments in real estate ventures	11,205			5,540
Increase in cash surrender value of life insurance policies	(1,225		)	(435		)
Increase in restricted assets	(6,872		)	(1,108		)
Issuance of notes receivable	(4,410		)	(250		)
Proceeds from sale of fixed assets	3			4
Capital expenditures	(7,859		)	(20,746		)
Repayments of notes receivable	5,106			933
Purchase of subsidiaries	—			(250		)
Pay downs of investment securities	5,743			690
Proceeds from sale of preferred securities	1,000			—
Investments in real estate held for sale	(12,512		)	—
Net cash used in investing activities	(62,082		)	(195,807		)
Cash flows from financing activities:
Proceeds from issuance of debt	1,519			413,918
Deferred financing costs	(624		)	(12,360		)
Repayments of debt	(4,968		)	(10,305		)
Borrowings under revolver	130,691			645,894
Repayments on revolver	(146,655		)	(673,866		)
Dividends and distributions on common stock	(139,430		)	(122,051		)
Distributions to non-controlling interest	(564		)	(4,861		)
Proceeds from exercise of Vector options	1,321			4,407
Tax benefit of options exercised	756			937
Net cash (used in) provided by financing activities	(157,954		)	241,713
Net (decrease) increase in cash and cash equivalents	(80,018		)	145,950
Cash and cash equivalents, beginning of period	326,365			234,466
Cash and cash equivalents, end of period	$	246,347		$	380,416

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 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 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 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.

Revisions to December 31, 2014 Consolidated Balance Sheet. The Company has revised its December 31, 2014 Consolidated Balance Sheet, which originally presented deferred income tax assets and liabilities (current and noncurrent) on a gross basis, rather than a net basis. The revisions conform to ASC 740-10-45-6 which states all current deferred tax liabilities and assets shall be offset and presented as a single amount and all noncurrent deferred tax liabilities and assets shall be offset and presented as a single amount. The Company assessed the materiality of this error on previously issued financial statements and concluded that the error was immaterial.

The revisions are presented in the table below:

	December 31, 2014
	As Previously Reported		Revision			As Revised
Deferred income taxes	$	29,192	$	(29,192	)	$	—
Total current assets	857,846		(29,192		)	828,654
Deferred income taxes	51,129		(51,129		)	—
Total assets	$	1,573,392	$	(80,321	)	$	1,493,071
Deferred income taxes, net	$	57,671	$	(29,192	)	$	28,479
Total current liabilities	270,095		(29,192		)	240,903
Deferred income taxes, net	145,639		(51,129		)	94,510
Total liabilities	1,551,340		(80,321		)	1,471,019
Total stockholders' equity	22,052		—			22,052
Total liabilities and stockholders' equity	$	1,573,392	$	(80,321	)	$	1,493,071

7

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(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 and E-Cigarettes 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 fixed or 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 includes federal excise taxes on tobacco sales in revenues and cost of goods sold. Since the Company’s primary 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 only 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 commissions earned by the Company’s real estate 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 expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

(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 29, 2015. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income attributed to Vector Group Ltd.	$	12,205		$	14,879		$	51,029		$	25,384
Expense attributed to participating securities	(360		)	(423		)	(1,510		)	(739		)
Net income attributed to Vector Group Ltd. available to common stockholders	$	11,845		$	14,456		$	49,519		$	24,645

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2015	2014	2015	2014
Weighted-average shares for basic EPS	118,023,224	108,374,350	117,660,001	106,464,835
Plus incremental shares related to stock options and non-vested restricted stock	134,315	120,354	175,097	118,724
Weighted-average shares for diluted EPS	118,157,539	108,494,704	117,835,098	106,583,559

8

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The following were outstanding during the three and nine months ended September 30, 2015 and 2014, 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,
	2015		2014		2015		2014
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		34,229,687		25,186,773		32,820,165
Weighted-average conversion price	$	19.63	$	17.49	$	19.53	$	16.48

(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. 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, 2015, the range of estimated fair market values of the Company's embedded derivatives was between $148,769 and $150,125. The Company recorded the fair market value of its embedded derivatives at the approximate midpoint of the range at $149,739 as of September 30, 2015. At December 31, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $167,593 and $171,215. The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $169,386 as of December 31, 2014. The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

(f) Investment in Real Estate Ventures:

The Company's interest in Variable Interest Entities ("VIE") is primarily in the form of equity ownership. The Company examines specific criteria and uses judgment when determining if the Company is the primary beneficiary of a VIE. Factors considered include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's executive committee, existence of unilateral kick-out rights exclusive of protective rights or voting rights and level of economic disproportionality between the Company and its other partner(s).

Accounting guidance requires the consolidation of VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company's maximum exposure to loss in its investments in unconsolidated VIEs is limited to its investment in the unconsolidated VIEs which is the carrying value. The Company's maximum exposure to loss in its investment in its consolidated VIEs is limited to its investment which is the carrying value of the investment net of the non-controlling interest. Creditors of the consolidated VIEs have no recourse to the general credit of the primary beneficiary.

9

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(g) Other Income, Net:

Other income, net consisted of:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
(Loss) gain on warrants	$	(1,282	)	$	991		$	(1,765	)	$	868
Interest and dividend income	1,578			1,476			5,185			3,665
Accretion of interest income from debt discount on notes receivable	5			11			79			87
Gain on long-term investment	137			—			361			—
Out-of-period adjustment	—			—			—			1,231
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—			—			2,335
Provision for loss on real estate held for sale	(229		)	—			(229		)	—
Loss on sale of assets	(75		)	—			(75		)	—
Other expense	(1		)	(12		)	(2		)	(19		)
Other income, net	$	133		$	2,466		$	3,554		$	8,167

The out-of-period adjustment 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 2014 was not material to the Company's 2014 consolidated financial statements.

(h) Other Current Liabilities:

Other current liabilities consisted of:

	September 30, 2015		December 31, 2014
Accounts payable	$	11,966	$	10,856
Accrued promotional expenses	20,053		20,191
Accrued excise and payroll taxes payable, net	5,034		23,172
Accrued interest	16,121		28,321
Commissions payable	14,942		9,523
Accrued salary and benefits	17,232		16,009
Other current liabilities	26,455		18,683
Total other current liabilities	$	111,803	$	126,755

10

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(i) Goodwill and Other Intangible Assets:

The components of “Goodwill and other intangible assets, net” were as follows:

	September 30, 2015		December 31, 2014
Goodwill	$	70,791	$	70,791
Indefinite life intangibles:
Intangible asset associated with benefit under the MSA	107,511		107,511
Trademark - Douglas Elliman	80,000		80,000
Intangibles with a finite life, net	7,178		11,670
Total goodwill and other intangible assets, net	$	265,480	$	269,972

(j) Treasury shares:

On September 4, 2015, the Company canceled all of its 4,145,247 treasury shares with a cost basis of $12,857. The Company reduced Additional paid-in-capital in the Condensed Statement of Stockholders' Deficiency by its cost basis in the Treasury Stock.

(k) New Accounting Pronouncements:

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-16, Business Combination (Topic 805): Simplifying the Accounting for Measurement Period Adjustments (“ASU 2015-16”), which requires adjustments to provisional amounts initially recorded in a business combination that are identified during the measurement period to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU 2015-15 also requires the disclosure of the nature and amount of measurement-period adjustments recognized in the current period, including separately the amounts in current-period income statement line items that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance is effective for the Company beginning January 1, 2016. The Company will apply the guidance prospectively for all business combinations that occur subsequent to the adoption date.

In August 2015, FASB issued ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measure of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting), which codifies an Securities and Exchange Commission staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangement as assets. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 clarifies that the Securities and Exchange Commission staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This guidance is effective immediately and will be applied prospectively to any line-of-credit arrangements entered into subsequent to the effective date.

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Company will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance

11

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

is effective for the Company beginning January 1, 2016. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. ASU 2015-02 requires management to reevaluate all legal entities under a revised consolidation model specifically (1) modify the evaluation of whether limited partnership and similar legal entities are Variable Interest Entities (“VIEs”), (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In May 2014, FASB issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), (“ASU 2014-9”). ASU 2014-9 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As amended by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date the new standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted for annual reporting periods beginning subsequent to December 15, 2016. The new standard is required to be applied retrospectively to each prior reporting period presented or with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method and it has not determined the impact of the new standard on its consolidated financial statements.

2. INVENTORIES

Inventories consist of:

	September 30, 2015			December 31, 2014
Leaf tobacco	$	50,672		$	49,948
Other raw materials	4,184			3,532
Work-in-process	624			879
Finished goods	66,266			62,876
E-Cigarettes	106			3,079
Inventories at current cost	121,852			120,314
LIFO adjustments	(31,157		)	(29,991		)
	$	90,695		$	90,323

All of the Company's inventories at September 30, 2015 and December 31, 2014 are reported under the LIFO method. The $31,157 LIFO adjustment as of September 30, 2015 decreases the current cost of inventories by $20,321 for Leaf tobacco, $900 for Other raw materials, $41 for Work-in-Process, $9,887 for Finished goods and $8 for E-Cigarettes. The $29,991 LIFO adjustment as of December 31, 2014 decreased the current cost of inventories by $19,941 for Leaf tobacco, $861 for Other raw materials, $39 for Work-in-Process, $9,054 for Finished goods and $96 for E-Cigarettes.

Liggett enters into purchase commitments for leaf tobacco that will be used entirely for future production. The future quantities of leaf tobacco and prices are established at the date of the commitments. At September 30, 2015, Liggett had tobacco purchase commitments of approximately $14,796. Liggett has a single source supply agreement for fire safe cigarette paper through 2019.

12

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The Company capitalizes the incremental prepaid cost of the MSA in ending inventory. Each year, the Company capitalizes in inventory that portion of its MSA liability that relates to cigarettes shipped to public warehouses but not sold. The amount of capitalized MSA cost in “Finished goods” inventory was $15,906 and $14,369 at September 30, 2015 and December 31, 2014, respectively.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at September 30, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,524	$	44,623	$	(1,171	)	$	106,976
Mutual funds invested in fixed income securities	54,864		—		—			54,864
Marketable debt securities	126,080		456		—			126,536
Total investment securities available for sale	$	244,468	$	45,079	$	(1,171	)	$	288,376

The components of investment securities available for sale at December 31, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,041	$	92,255	$	(1,104	)	$	154,192
Mutual funds invested in fixed income securities	61,485		—		(1,659		)	59,826
Marketable debt securities	130,311		2,630		(916		)	132,025
Total investment securities available for sale	$	254,837	$	94,885	$	(3,679	)	$	346,043

The table below summarizes the maturity dates of marketable debt securities at September 30, 2015.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	35,433	$	—	$	35,433	$	—
Corporate securities	54,741		6,917		47,565		259
U.S. mortgage-backed securities	6,351		1,061		5,132		158
Commercial mortgage-backed securities	14,537		6,632		1,793		6,112
U.S. asset-backed securities	13,360		2,342		10,343		675
Index-linked U.S. bonds	2,114		—		2,114		—
Total marketable debt securities by maturity dates	$	126,536	$	16,952	$	102,380	$	7,204

The available-for-sale investment securities with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:

13

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	In loss position for
	Less than 12 months					12 months or more
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Total Fair Value		Total Unrealized Losses
September 30, 2015
Marketable equity securities	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
December 31, 2014
Marketable equity securities	$	6,599	$	(138	)	$	3,534	$	(966	)	$	10,133	$	(1,104	)
Mutual funds invested in fixed income securities	59,826		(1,659		)	—		—			59,826		(1,659		)
Marketable debt securities
U.S. Government securities	22,375		(18		)	—		—			22,375		(18		)
Corporate securities	30,896		(204		)	7,224		(131		)	38,120		(335		)
U.S. mortgage-backed securities	3,370		(26		)	—		—			3,370		(26		)
Commercial mortgage-backed securities	11,332		(46		)	5,176		(432		)	16,508		(478		)
U.S. asset-backed securities	15,228		(29		)	—		—			15,228		(29		)
Index-linked U.S. bonds	2,098		(30		)	—		—			2,098		(30		)
	$	151,724	$	(2,150	)	$	15,934	$	(1,529	)	$	167,658	$	(3,679	)

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses

from equity and debt securities are due to market price movements. The Company believes the unrealized losses associated with the Company's equity securities will be recovered in the future.

Gross realized gains and losses on available-for-sale investment securities were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Gross realized gains on sales	$	129		$	100		$	13,601		$	151
Gross realized losses on sales	(950		)	(67		)	(1,583		)	(189		)
(Loss) gain on sale of investment securities available for sale	$	(821	)	$	33		$	12,018		$	(38	)
Gross realized losses on other-than-temporary impairments	$	(12,211	)	$	—		$	(12,211	)	$	—

The Company recorded an “Other-than-temporary-impairment” charge of $12,211 during the three and nine months ended September 30, 2015.  The largest component of this charge was $6,895 related to Morgans Hotel Group Co., a company where Vector's President and Chief Executive Officer also serves as Chairman of the Board of Directors.

Although management generally does not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing the Company's investment securities portfolio, management may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders.

14

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Proceeds from investment securities sales totaled $42,768 and $124,342 and proceeds from early redemptions by issuers totaled $3,130 and $615 in the three months ended September 30, 2015 and 2014, respectively, mainly from sales of Corporate securities and U.S. Government securities.

Proceeds from investment securities sales totaled $161,029 and $173,046 and proceeds from early redemptions by issuers totaled $8,397 and $1,207 in the nine months ended September 30, 2015 and 2014, respectively, mainly from sales of Corporate securities and U.S. Government securities.

4. LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

	September 30, 2015		December 31, 2014
Investments accounted at cost	$	42,056	$	32,239
Investments accounted under the equity method	11,592		8,053
	$	53,648	$	40,292

Long-term investments accounted for at cost are summarized as follows:

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Long-term investments	$	41,541	$	46,435	$	31,541	$	38,039
Real estate partnership	515		587		698		1,108
	$	42,056	$	47,022	$	32,239	$	39,147

The Company accounts for investments which it has significant influence under the equity method. The Company recorded an equity loss of $579 and equity income of $829 for the three months ended September 30, 2015 and September 30, 2014, respectively. The Company recorded an equity loss of $2,273 and equity income of $1,462 for the nine months ended September 30, 2015 and September 30, 2014, respectively. The fair value of the investments in investment companies accounted for under the equity method was approximately $11,592 and $8,053 as of September 30, 2015 and December 31, 2014.

The Company's investments under the equity method contains an investment in the common stock of Boyar Value Fund ("Boyar"). As of September 30, 2015, the Company owned approximately 30% of the outstanding stock of Boyar. The carrying value of the investment based on the quoted market price as of September 30, 2015 was $6,984. Ladenburg Thalmann Fund Management, LLC, an indirect subsidiary of Ladenburg Thalmann Financial Services Inc. is the manager of Boyar.

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.The Company owns a 70.59% interest in Douglas Elliman and the condensed consolidated financial statements of the Company include the account balances of Douglas Elliman.

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:

15

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	September 30, 2015		December 31, 2014
Milanosesto Holdings (Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (1107 Broadway)	9,522		6,383
The Marquand	13,900		12,000
11 Beach Street	11,928		12,328
20 Times Square (701 Seventh Avenue)	13,095		12,481
111 Murray Street	16,114		27,319
357 West (160 Leroy Street)	1,950		1,467
PUBLIC Chrystie House (Chrystie Street)	5,297		3,300
The Dutch (25-19 43rd Avenue)	980		733
Queens Plaza (23-10 Queens Plaza South)	14,732		11,082
87 Park (8701 Collins Avenue)	5,654		6,144
125 Greenwich Street	11,193		9,308
West Hollywood Edition (9040 Sunset Boulevard)	5,604		5,604
76 Eleventh Avenue	17,000		—
Monad Terrace	6,438		—
Condominium and Mixed Use Development	133,407		108,149
Maryland Portfolio	1,377		3,234
ST Portfolio	16,881		15,283
Apartment Buildings	18,258		18,517
Park Lane Hotel	19,373		19,341
Hotel Taiwana	7,337		7,629
Coral Beach and Tennis Club	3,023		2,816
Hotels	29,733		29,786
The Plaza at Harmon Meadow	5,638		—
Commercial	5,638		—
Other	1,979		1,971
Investments in real estate ventures	$	194,052	$	163,460

Condominium and Mixed-Use Development:

Condominium and mixed-use development investments range in ownership percentage from 5% to 49.5%. New Valley recorded net equity income of $248 and $923 for the three and nine months ended September 30, 2015, respectively. The $923 equity income for the nine months ended September 30, 2015 was primarily related to New Valley's proportionate share of the Marquand’s equity earnings from the sale of five units offset by equity losses from the other condominiums and mixed-use development projects. New Valley recorded equity income of $5,090 and $7,389 for the three and nine months ended September 30, 2014, respectively. The Company recorded $5,000 of equity income related to its proportionate share of the Marquand’s equity earnings from the sale of approximately 40% of its units during the quarter and $2,254 of equity income primarily related to the

16

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

sale of a commercial unit at 10 Madison Square Park West for the nine months ended September 30, 2014.

During the nine months ended September 30, 2015, New Valley made capital contributions totaling $35,776 related to ventures where New Valley previously held an investment, primarily at 10 Madison Square Park West, Queens Plaza and 125 Greenwich Street, and the new ventures 76 Eleventh Avenue and Monad Terrace. For ventures where New Valley previously held an investment, New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's direct investment percentage did not change. During the nine months ended September 30, 2014, New Valley made capital contributions totaling $27,225 primarily related to 111 Murray Street, Queens Plaza and 125 Greenwich Street. New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's investment percentages did not change.

In May 2015, New Valley purchased a 5.1% interest in 76 Eleventh Avenue for $17,000. The joint venture related to 76 Eleventh Avenue is a variable interest entity, however, New Valley is not the primary beneficiary. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in 76 Eleventh Avenue as of September 30, 2015 is $17,000.

In May and June 2015, New Valley purchased a 31.3% interest in Monad Terrace for $6,200. The joint venture related to Monad Terrace is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in Monad Terrace as of September 30, 2015 is $6,438.

During the nine months ended September 30, 2015, New Valley received distributions of $11,441 primarily related to a return of capital from 111 Murray Street. The return of capital primarily resulted from the admittance of a new limited partner in 111 Murray Street. The admittance of the new limited partner reduced New Valley's interest in the overall joint venture from 25% to 9.5%. New Valley recognized equity income of $344 as a result of the transaction, offsetting the equity loss of $344 recognized during the year. During the nine months ended September 30, 2014, New Valley received distributions of $4,547 primarily related to 10 Madison Square Park West, 125 Greenwich Street, 11 Beach Street and 20 Times Square.

New Valley's maximum exposure to loss, net of non-controlling interest, as a result of its investments in condominium and mixed-use developments was $130,027 at September 30, 2015.

Apartment Buildings:

Apartment building investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded an equity loss of $72 for the three months ended September 30, 2015 and equity income of $1,730 for the nine months ended September 30, 2015, respectively, primarily related to the ST Portfolio apartment portfolio. In 2015, ST Portfolio sold one (Phoenix, Arizona) of its three remaining Class A multi-family buildings and the proceeds were used to retire debt. New Valley recorded equity losses of $87 and $251 for the three and nine months ended September 30, 2014, respectively, primarily related to equity losses of ST Portfolio. New Valley received distributions of $1,989 and $375 during the nine months ended September 30, 2015 and 2014, respectively, primarily related to NV Maryland. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $18,258 at September 30, 2015.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. New Valley recorded equity losses of $1,323 and $2,330 for the three and nine months ended September 30, 2015, respectively, related to hotel operations. New Valley recorded equity losses of $2,053 and $4,222 for the three and nine months ended September 30, 2014, respectively. New Valley made capital contributions totaling $2,277 for the nine months ended September 30, 2015, primarily related to Coral Beach and Tennis Club and Park Lane Hotel. New Valley made capital contributions totaling $1,973 for the nine months ended September 30, 2014, primarily related to Coral Beach. New Valley's maximum exposure to loss as a result of its investments in hotels was $29,733 at September 30, 2015.

17

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Commercial:

Commercial ventures include a contribution by New Valley of $5,931 for a 49% interest in a joint venture which purchased a shopping center, The Plaza at Harmon Meadow, in New Jersey at the end of March 2015. The joint venture is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley will account for its interest in the joint venture under the equity method of accounting. New Valley recorded equity income of $20 and $47 for the three and nine months ended September 30, 2015 related to shopping center rental operations. New Valley received distributions totaling $340 for the nine months ended September 30, 2015, related to Harmon Meadow. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $5,638 at September 30, 2015.

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, 2015		December 31, 2014
Escena, net	$	10,451	$	10,643
Sagaponack	12,512		—
Real estate held for sale, net	$	22,963	$	10,643

Escena.  The assets of “Escena, net” are as follows:

	September 30, 2015			December 31, 2014
Land and land improvements	$	8,902		$	8,953
Building and building improvements	1,873			1,865
Other	1,596			1,568
	12,371			12,386
Less accumulated depreciation	(1,920		)	(1,743		)
	$	10,451		$	10,643

New Valley recorded operating losses of $779 and $804 for the three months ended September 30, 2015 and 2014, respectively, from Escena. New Valley recorded operating losses of $227 and $571 for the nine months ended September 30, 2015 and 2014, respectively, from Escena.

18

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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.

Investment in Sagaponack. In April 2015, New Valley has invested $12,502 in a residential real estate project located in Sagaponack, NY. The project is wholly owned and the balances of the project are included in the consolidated financial statements of the Company. As of September 30, 2015, the assets of Sagaponack consist of land and land improvements of $12,512.

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

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

	September 30, 2015			December 31, 2014
Vector:
7.75% Senior Secured Notes due 2021, including premium of $8,337 and $9,275	$	608,337		$	609,275
6.75% Variable Interest Senior Convertible Note due 2015	—			25,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $136,365 and $146,634*	93,635			83,366
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $89,454 and $98,831*	169,296			159,919
Liggett:
Revolving credit facility	1,803			17,767
Term loan under credit facility	3,368			3,589
Equipment loans	10,919			13,966
Other	289			469
Total notes payable, long-term debt and other obligations	887,647			913,351
Less:
Current maturities	(7,957		)	(52,640		)
Amount due after one year	$	879,690		$	860,711

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($0 at September 30, 2015 and $884 at December 31, 2014, respectively), the 7.5% Variable Interest Senior Convertible Notes ($75,788 at September 30, 2015 and $87,638 at December 31, 2014, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($73,951 at September 30, 2015 and $80,864 at December 31, 2014, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

6.75% Variable Interest Senior Convertible Note due 2015 - Vector:

On February 3, 2015, the holder of the 6.75% Variable Interest Senior Convertible Note due 2015, converted the remaining $25,000 principal balance of the $50,000 Note into 2,338,930 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $25,000.

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

As of September 30, 2015, a total of $5,171 was outstanding under the revolving and term loan portions of the credit facility. Availability, as determined under the facility, was approximately $52,915 based on eligible collateral at September 30, 2015.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

The conversion rates for all convertible debt outstanding as of September 30, 2015 and December 31, 2014, are summarized below:

	September 30, 2015			December 31, 2014
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	—	—	$	10.69	93.5572
7.5% Variable Interest Senior Convertible Notes due 2019	$	15.98	62.5743	$	15.98	62.5743
5.5% Variable Interest Senior Convertible Debentures due 2020	$	24.64	40.5891	$	24.64	40.5891

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Amortization of debt discount, net	$	6,868	$	14,277	$	18,708	$	41,180
Amortization of deferred finance costs	1,085		1,147		3,073		2,910
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
	$	7,953	$	16,418	$	21,781	$	49,202

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2015					December 31, 2014
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	887,647	(1)	$	1,285,711	$	913,351	(1)	$	1,313,711

______________________

⁽¹⁾ The carrying value does not include the carrying value of the embedded derivative. See Note 11.

Notes payable and long-term debt are carried on the condensed consolidated balance sheet at amortized cost. The fair value determinations disclosed above are classified as Level 2 under the fair value hierarchy disclosed in Note 11 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 is not necessarily indicative of the amount that could be realized in a current market exchange.

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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 three months ended September 30, 2015 and 2014, Liggett incurred tobacco product liability legal expenses and costs totaling $5,355 and $2,108. For the nine months ended September 30, 2015 and 2014, Liggett incurred tobacco product liability legal expenses and costs totaling $11,068 and $7,282. These costs are included in the operating, selling, administrative and general expenses and litigation settlement and judgment expense line items in the Condensed Consolidated Statements of Operations.

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 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 $12,268 in bonds as of September 30, 2015.

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 challenged the constitutionality of the bond cap statute, but to date the courts 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 September 30, 2015, 23Engle progeny cases where Liggett was a defendant at trial resulted in verdicts. Fifteen verdicts were returned in favor of the plaintiffs (although in two of these cases (Irimi and Cohen), the court granted defendants' motion for a new trial and another (Putney) was reversed on appeal) and eight in favor of Liggett. In certain cases, the judgments were entered jointly and severally with other defendants and Liggett may face the risk that one or more co-defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated share of a judgment. As a result, Liggett under certain circumstances may have to pay more than their proportionate share of any bonding

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Unaudited

or judgment related amounts. In four of the cases, punitive damages were awarded against Liggett. Several of the judgments remain on appeal. 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, 2015, Liggett (and in certain cases the Company) had, on an individual basis, settled 168Engle progeny cases for approximately $3,546 in the aggregate. Five of those settlements occurred in the third quarter of 2015. 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, 2015, there were 55 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 approximately 285 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:

State	Number of Cases
Florida	29
Maryland	12
New York	8
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.

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Unaudited

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 sued 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. In October 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, starting in February 2015. In exchange, the claims of over 4,900 plaintiffs were dismissed with prejudice against the Company and Liggett. Due to the settlement, in 2013 the Company recorded a charge of $86,213, of which $25,213 is related to certain payments discounted to their present value using an 11% annual discount rate. The Company recorded an additional charge of $643 in the first quarter of 2015 for additional cases joining the settlement and the restructuring of certain payments related to several previously settled cases. The installment payments total approximately $48,000 on an undiscounted basis. The Company’s future payments will be approximately $3,400 per annum through 2028, with a cost of living increase beginning in 2021.

Notwithstanding the comprehensive nature of the Engle Progeny Settlement, approximately 285 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 September 30, 2015, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages (as adjusted) (1)	Liggett Punitive Damages	Status (2)
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	$—	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	156	—	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	1,350	—	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	—	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings regarding the amount of the award. Plaintiff filed a motion for rehearing which was denied. Both sides sought discretionary review from the Florida Supreme Court. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	225	—	Liggett satisfied the judgment and other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett, the case is concluded.
January 2012	Ward v. R.J. Reynolds	Escambia	1	—	Liggett satisfied the 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. Oral argument occurred on June 16, 2015.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. The court refused to reduce the award by decedent's comparative fault. Judgment was 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. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	205	—	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal. Defendants cross-appealed.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	3,479	—	Liggett settled its portion of the judgment for $1,500 and the case is concluded as to Liggett.
August 2014	Irimi v. R.J. Reynolds	Broward	31	—	In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed to the Fourth District Court of Appeal.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	A final judgment was entered against Liggett for $13,100. Liggett was the only defendant at trial. On appeal to the Second District Court of Appeal. The parties reached an agreement regarding the amount of plaintiff's trial level attorneys' fees and costs in the event plaintiff prevails on appeal.
November 2014	Boatright v. R.J. Reynolds	Polk	—	300	In November 2014, the jury awarded compensatory damages in the amount of $15,000 with 15% fault apportioned to plaintiff and 85% to Philip Morris.  The jury further assessed punitive damages against Philip Morris for $19,700 and Liggett for $300.  Post-trial motions were denied. A joint and several judgment was entered in the amount of $12,750 on the compensatory damages. Judgment was further entered against Liggett for $300 in punitive damages. On appeal to the Second District Court of Appeal.
June 2015	Caprio v. R.J. Reynolds	Broward	28	0	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  On appeal to the Fourth District Court of Appeal.
Total Damages Awarded:			29,547	18,400
Amounts paid or compromised:			(17,978)	(1,000)
Damages remaining on Appeal:			$11,569	$17,400
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault. The amounts listed above do not include attorneys' fees or statutory interest.
(2) See Exhibit 99.1 for a more complete description of the cases currently on appeal.

Through September 30, 2015, Liggett paid $20,312, including interest and legal fees, to satisfy the judgments in sevenEngle progeny cases (Lukacs, Campbell, Douglas, Clay,Tullo, Ward and Rizzuto).

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The Company’s potential range of loss in the Putney, Calloway, Cohen, Irimi, Lambert, Boatright and Caprio cases is between $0 and $26,219 in the aggregate, plus 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 $4,146 for Buchanan, accrued by Liggett in the third quarter 2015, no amounts have been expensed or accrued in the 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 Judgments. In December 2010, in the Martin case, a state court case against R.J. Reynolds, the First District Court of Appeal 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 findings. 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. The Martin decision has led to additional 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. To date, the United States Supreme Court has declined to review any Engle progeny decisions.

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 Engle progeny claim for a fraud committed before May 5, 1982 is barred. In April 2015, the Florida Supreme Court reversed the Fourth District Court of Appeal decision and reinstated the jury verdict. The Florida Supreme Court held that Engle defendants cannot raise a statute of repose defense to claims for concealment or conspiracy. Defendants' motion for rehearing was denied.

In April 2015, in Graham v. R.J. Reynolds Tobacco Co., the Eleventh Circuit held that federal law impliedly preempts use of the res judicataEngle findings to establish claims for strict liability or negligence. The plaintiff moved for rehearing.

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Unaudited

Maryland Cases

Liggett is currently a defendant in 12 multi-defendant personal injury cases in Maryland that allege claims arising from asbestos and tobacco exposure.  Liggett along with other tobacco defendants have moved (or are in the process of moving) to dismiss the cases.  In the past, motions to dismiss have generally been successful, typically resulting in the dismissal without prejudice of the tobacco company defendants, including Liggett.  Recently, however, a Maryland intermediate appellate court ruled, in Stidham, et al. v. R. J. Reynolds Tobacco Company, et al., that dismissal of tobacco company defendants may not be appropriate where injury is asserted based on both asbestos and tobacco usage. Although Stidham is subject to further appellate review, and the scope of its holding is not yet known, it is possible that Liggett and other tobacco company defendants will not be dismissed from pending synergy exposure cases, and may be named as a defendant in asbestos-related personal injury actions in Maryland going forward, including approximately 20 additional synergy exposure cases currently pending in Maryland state court.

Liggett Only Cases.  There are currently three cases pending where Liggett is the only remaining defendant. Each of these cases is an Individual Action. 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, affirmed on appeal and remanded to the trial court for further proceedings. A status conference is scheduled for November 13, 2015. There has been no further activity in the other two Individual Actions. Cases where Liggett is the only defendant could increase as a result of the remaining Engle progeny cases.

Class Actions

As of September 30, 2015, three actions were pending for which either a class had been certified or plaintiffs were seeking class certification where Liggett is a named defendant. 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 2013, plaintiffs’ filed a motion to stay the case and that motion was granted.

In February 1998, in Parsons v. AC & S Inc., a purported class action 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 action was commenced against cigarette manufacturers alleging they conspired to fix cigarette prices in violation of antitrust laws. Plaintiffs sought to recover an unspecified amount in actual and punitive damages. Class certification was granted in November 2001. In March 2012, the court granted the defendants' motions for summary judgment and dismissed plaintiffs’ claims with prejudice. In July 2014, the court of appeals affirmed the lower court’s decision. In August 2014, plaintiffs sought review by the Kansas Supreme Court, which the court denied in June 2015, thereby concluding this litigation.

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. 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

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

have included instructions on how to use them. The issue of damages was reserved for further proceedings. The court entered judgment in October 2013, dismissing all claims except the ventilated filter claim. The judgment was affirmed on appeal and remanded to the trial court for further proceedings. In April 2015, the plaintiffs filed a petition for writ of certiorari to the United States Supreme Court which subsequently declined review. In July 2015, the trial court ruled on the scope of the ventilated filter claim and determined that only 30 plaintiffs have potentially viable claims against the non-Liggett defendants, which may be pursued in a second phase of the trial. The court intends to try the claims of these plaintiffs in six consolidated trials, each with five plaintiffs. The trial court set the first two dates for the consolidated trials for June 13, 2016 and December 4, 2016. With respect to Liggett, the trial court requested that Liggett and plaintiffs brief whether any claims against Liggett survive given the outcome of the first phase of the trial.  Briefing of that issue is underway. If the case proceeds against Liggett, it is estimated that Liggett could be a defendant in less than 25 of the remaining individual cases.

In addition to the cases described above, numerous class actions remain certified against other cigarette manufacturers including cases alleging, among other things, that use of the terms “lights” and “ultra lights” constitutes unfair and deceptive trade practices. 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, 2015, one Health Care Cost Recovery Action was 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, but can 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. Although no specific damage amounts are typically pleaded, 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.

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

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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 appealed 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, 2015, there were nineEngle progeny cases scheduled for trial through September 30, 2016, where Liggett (and/or the Company) is a named defendant. Trial dates are, however, subject to change. In Shulman, an Engle progeny case, trial commenced October 16, 2015.

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

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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 3.4% of the total cigarettes sold in the United States in 2014. 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, 2014, Liggett and Vector Tobacco pre-paid $100,000 of their approximate $117,800 2014 MSA obligation. Liggett and Vector Tobacco paid the remaining $17,800 on April 15, 2015.

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 Participating Manufacturers' loss of market share to non-participating manufacturers for 2003. Under the MSA, such a “significant factor” determination results in the calculation of a reduction in the payment obligations of the Participating Manufacturers, which is known as the “NPM Adjustment.” The economic consulting firm subsequently made the same determination with respect to 2004 and 2005. In March 2009, a different economic consulting firm made the same determination for 2006. As a result, the Participating 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 - 2014 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 Participating Manufacturers for the benefit of that Settling State.

For 2003 - 2014, Liggett and Vector Tobacco, as applicable, disputed that they owed the Settling States the NPM Adjustments as calculated by the independent auditor. As permitted by the MSA, Liggett and Vector Tobacco 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. Under the MSA, the independent auditor previously determined the NPM Adjustment for 2003 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 shares of the Settling States, entered into an agreement providing for the nationwide arbitration of the dispute with respect to the NPM Adjustment for 2003, as ordered by the various state courts. In exchange, the Participating Manufacturers 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.

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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 MSA payments for 2012, due April 2013. In May 2013, two additional states joined the settlement and in June 2014, another two states joined the settlement.Several non-settling states filed motions in state courts attempting to vacate the settlement award. Although certain terms of the settlement were implemented by the independent auditor in April 2013, no assurance can be given as to the ultimate outcome of the non-settling states’ challenges. The parties have been working towards converting the term sheet into a final settlement agreement. As a result of the settlement, in the first nine months of 2013, Liggett reduced cost of sales by $6,947. Liggett received credits of $1,733 in April 2014 from these settling states related to the 2013 NPM Adjustment. Liggett received additional credits of $1,940 in April 2015 related to the 2014 NPM Adjustment.

In September 2013, the panel issued its decisions with respect to the 15 states that did not enter into the term sheet and as to which the Participating Manufacturers contested diligence. The panel found that six of these states did not diligently enforce their MSA escrow statutes in 2003. As a result of this ruling, Liggett reduced cost of sales by $5,987, 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. Before the MSA payments for 2013 were due, the Pennsylvania trial court 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). Liggett 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 to which Liggett believes it is entitled. After the April 2014 MSA payment date, a state trial court in Missouri issued a ruling similar to the ruling in Pennsylvania. As such, Liggett’s 2003 NPM Adjustment credit could be reduced by an additional $521. After the April 2014 MSA payment date, a state trial court in Maryland reached a different result from the Pennsylvania and Missouri trial courts, denying the state’s motion to vacate the award and further denying its motion to reduce the amount of the award payable to Liggett. A New Mexico trial court has not yet ruled on New Mexico’s motion. In June 2014, Kentucky and Indiana agreed to settle the dispute and join the term sheet described above. As a result, Liggett reduced cost of sales by approximately $1,400 in the second quarter of 2014. The Participating Manufacturers, including Liggett, appealed the Pennsylvania and Missouri decisions, while Maryland appealed the Maryland decision. In April 2015, the Pennsylvania decision was affirmed by the appellate court. The Participating Manufacturers have asked the Pennsylvania Supreme Court to grant discretionary review of that decision. In September 2015, the portion of the Missouri opinion that reduced the arbitration award was reversed by the appellate court. It is likely that the State will ask the Missouri Supreme Court to grant a discretionary appeal of that decision. In October 2015, the portion of the Maryland trial court ruling that denied reduction of the arbitration award was reversed by the appellate court. It is likely that the Participating Manufacturers will ask the Maryland Court of Appeals (Maryland’s highest court) to grant a discretionary review of that decision.If Liggett is unsuccessful in its appeals or if other states are successful with respect to any such appeals or 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 might be obligated to pay additional monies.

In October 2015, substantially all of the Participating Manufacturers settled the NPM Adjustment dispute with the state of New York for 2004 - 2014 and agreed to a mechanism for potential future credits against the Participating Manufacturers' MSA payments for 2015 forward. As a result of the settlement, Liggett reduced cost of sales by approximately $5,700 for the three and nine months ended September 30, 2015.

The remaining NPM Adjustment accrual of approximately $20,000 at September 30, 2015 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. Following release of previously disputed amounts to the state of New York as part of the October 2015 settlement, it is anticipated there will be approximately $23,000 remaining in the disputed payments accounts relating to Liggett's 2011- 2014 NPM Adjustment disputes with the non-settling states.

    Disputes over the NPM Adjustments for 2004-2014 remain to be arbitrated with the states that have not joined the settlement. Liggett is currently involved in litigation in 20 states over the scope and form of the arbitration for 2004. Further adjustments could also be due to Liggett and Vector Tobacco under the settlement with 24 states for 2013 forward.

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

In December 2012, the parties arbitrated the dispute. In February 2013, the arbitrators ruled that the independent auditor was precluded from recalculating Liggett’s grandfathered market share (“GFMS”) exemption. The arbitrators further ruled that, for purposes of calculating Liggett’s payment obligations, 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 opposed Liggett’s motion.

In October 2014, the panel issued a Corrected Final Award that eliminated the 1.25% adjustment increase. The panel further determined that the independent auditor shall compute Liggett’s market share for all years after 2000 on a “net” basis, but adjust that computation to approximate “gross” market share by using actual returned product data for each year. In July 2015, the independent auditor issued calculations, purportedly based on the Corrected Final Award, which indicated that Liggett owes approximately $16,000 for years 2001 - 2013. Liggett contends that the independent auditor's calculations are not consistent with the Corrected Final Award and has disputed same. Liggett's accrual for this matter was $8,500 at September 30, 2015.

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 were 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. The Attorneys General for Florida, Mississippi and Texas previously advised Liggett that they believed that Liggett had failed to make payments under the respective settlement agreements with those states. In 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, with the payments from year 12 forward being subject to an inflation adjustment. These payments are in lieu of any other payments allegedly due to Florida. In 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 multiple Engle progeny cases and 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.

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Unaudited

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, 2015 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, 2015	$	26,322		$	3,149		$	29,471		$	25,809		$	25,700		$	51,509
Expenses	83,236			6,371			89,607			—			(195		)	(195		)
NPM Settlement adjustment	—			—			—			(5,715		)	—			(5,715		)
Change in MSA obligations capitalized as inventory	1,536			—			1,536			—			—			—
Payments	(18,142		)	(5,851		)	(23,993		)	—			—			—
Reclassification from non-current liabilities	—			3,305			3,305			—			(3,305		)	(3,305		)
Interest on withholding	—			666			666			—			1,872			1,872
Balance as of September 30, 2015	$	92,952		$	7,640		$	100,592		$	20,094		$	24,072		$	44,166

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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(Dollars in Thousands, Except Per Share Amounts)

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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 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. Liggett previously 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 Liggett Vector Brands' obligation under the agreement was immaterial at September 30, 2015.

There are several other proceedings, lawsuits and claims pending against the Company or one or more of its consolidated subsidiaries unrelated to tobacco or tobacco product liability. For instance, Douglas Elliman is subject to various types of litigation in the ordinary course of its business. 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.

8. EMPLOYEE BENEFIT PLANS

The following table summarizes key information related to the Company's pension plans and other postretirement benefits:

	Pension Benefits												Other Postretirement Benefits
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2015			2014			2015			2014
Service cost — benefits earned during the period	$	133		$	131		$	398		$	392		$	2		$	2		$	6		$	7
Interest cost on projected benefit obligation	1,205			1,549			3,803			4,647			93			108			278			323
Expected return on assets	(1,814		)	(2,130		)	(5,627		)	(6,389		)	—			—			—			—
Settlement loss	—			—			1,607			—			—			—			—			—
Amortization of net loss (gain)	254			269			823			806			(24		)	(15		)	(73		)	(45		)
Net (income) expense	$	(222	)	$	(181	)	$	1,004		$	(544	)	$	71		$	95		$	211		$	285

9. RESTRUCTURING

In October 2015, the Company's tobacco segment commenced a restructuring by realigning its sales force and adjusting its business model to more efficiently serve its chain and independent accounts. In connection with the restructuring, the segment's workforce is expected to decline by approximately 95 employees (or approximately 17% of the tobacco segment's workforce).

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The following table summarizes estimated restructuring charges and actual amounts expensed for the three and nine months ended September 30, 2015:

	Total Estimated Costs		Amounts expensed through September 30, 2015
Cash Charges
Employee severance and benefits	$	1,094	$	1,094
Lease termination costs	223		—
Other restructuring expenses	207		—
	1,524		1,094
Non-Cash:
Employee pension benefits	4,000		—
Point of Sale inventory impairment	454		454
	4,454		454
Total restructuring expenses	$	5,978	$	1,548

All amounts expensed through September 30, 2015 are included as Restructuring expenses in the Company’s condensed statements of operations and are all attributable to the Company’s Tobacco segment. The Company anticipates that the remaining restructuring expense will be recognized in the fourth quarter of 2015.

Severance and benefits expensed for the three and nine months ended September 30, 2015 relate entirely to a reduction in sales and administrative positions. Non-cash employee pension benefits costs relate to a reduction in manufacturing positions at Liggett’s plant in Mebane, NC.

The Company’s estimates of the restructuring expense and the timing of various events are based on a number of assumptions and actual results may differ materially from these estimates.

The following table presents the changes in the employee severance and benefits liability under the Tobacco segment restructuring plan:

Severance liability at July 1, 2015	$	—
Severance expense	1,094
Severance payments	—
Severance liability at September 30, 2015	$	1,094

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Unaudited

10. 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,
	2015		2014			2015		2014
Income before provision for income taxes	$	29,357	$	31,669		$	94,321	$	57,272
Income tax expense using estimated annual effective income tax rate	11,557		9,932			37,238		17,962
Changes in effective tax rates	1,539		(374		)	—		—
Impact of discrete items, net	412		1,305			313		1,944
Inclusion of tax liabilities from unincorporated entities	—		1,101			—		1,101
Income tax expense	$	13,508	$	11,964		$	37,551	$	21,007

The discrete item for the nine months ended September 30, 2015 is primarily related to a change in the marginal state tax rate as a result of recent state legislations changes, the rate differential in other comprehensive income and the results of recent state income tax audits.

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

11. 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, 2015
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	$	101,960	$	101,960	$	—	$	—
Certificates of deposit	3,465		—		3,465		—
Bonds	12,368		12,368		—		—
Investment securities available for sale
Equity securities	106,976		106,976		—		—
Mutual funds invested in fixed income securities	54,864		54,864		—		—
Fixed income securities
U.S. Government securities	35,433		—		35,433		—
Corporate securities	54,741		—		54,741		—
U.S. mortgage backed securities	6,351		—		6,351		—
Commercial mortgage-backed securities	14,537		—		14,537		—
U.S. asset backed securities	13,360		—		13,360		—
Index-linked U.S. bonds	2,114		—		2,114		—
Total fixed income securities	126,536		—		126,536		—
Warrants (1)	577		—		—		577
Total	$	406,746	$	276,168	$	130,001	$	577
Liabilities:
Fair value of derivatives embedded within convertible debt	$	149,739	$	—	$	—	$	149,739

(1) Warrants are 1,000,000 warrants to purchase Ladenburg Thalmann Financial Services Inc. (“LTS”) common stock received on November 4, 2011 which were carried at $577 as of September 30, 2015 and are included in “Other assets.” The Company recognized a loss of $1,765 for the nine months ended September 30, 2015 related to the change in fair value of the Warrants.

36

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Fair Value Measurements as of December 31, 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	$	205,180	$	205,180	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	4,868		4,868		—		—
Investment securities available for sale
Equity securities	154,192		153,666		526		—
Mutual funds invested in fixed income securities	59,826		59,826		—		—
Fixed income securities
U.S. Government securities	35,446		—		35,446		—
Corporate securities	56,248		7,397		48,851		—
U.S. Government and federal agency	4,770		—		4,770		—
Commercial mortgage-backed securities	16,508		—		16,508		—
U.S. asset-backed securities	16,955		—		16,955		—
Index-linked U.S. bonds	2,098		—		2,098		—
Total fixed income securities	132,025		7,397		124,628		—
Warrants (1)	2,342		—		—		2,342
Total	$	561,895	$	430,937	$	128,616	$	2,342
Liabilities:
Fair value of derivatives embedded within convertible debt	$	169,386	$	—	$	—	$	169,386

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,342 as of December 31, 2014 and are included in “Other assets.” The Company recognized income of $584 for the year ended December 31, 2014 related to the change in fair value of the Warrants. The Company recognized income of $868 for the nine months ended September 30, 2014.

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 based on quoted market prices of securities that are thinly traded.

The fair value of derivatives embedded within convertible debt was derived using a valuation model. These derivatives 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 due 2020 to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt are presented on the Condensed Consolidated Statements of Operations.

The value of the embedded derivatives is contingent on changes in implied interest rates of the convertible debt, the Company's stock price, stock volatility as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on the Company's 2020 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. 

37

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Warrant	$	577	Option model	Stock price	$	2.11
				Exercise price	$	1.68
				Term (in years)	1.1
				Volatility	39.23		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	149,739	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.61
				Convertible trading price (as a percentage of par value)	111.63		%
				Volatility	18.72		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 6.5% (6.14%)

38

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,342	Option model	Stock price	$	3.95
				Exercise price	$	1.68
				Term (in years)	1.8
				Volatility	44.42		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	169,386	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	21.31
				Convertible trading price	106.8		%
				Volatility	16.00		%
				Implied credit spread	6.25% - 7.25% (6.75%)

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of September 30, 2015 and December 31, 2014.

12. SEGMENT INFORMATION

The Company's significant business segments for the three and nine months ended September 30, 2015 and 2014 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, Sagaponack 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.

39

VECTOR GROUP LTD.

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, 2015 and 2014 follows:

							Real			Corporate
	Tobacco			E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2015
Revenues	$	264,170		$	201		$	185,563		$	—		$	449,934
Operating income (loss)	63,630		(1)	(2,146		)	12,227			(4,106		)	69,605
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Depreciation and amortization	2,850			—			3,388			435			6,673
Three months ended September 30, 2014
Revenues	$	264,520		$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993		(2)	(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
Nine months ended September 30, 2015
Revenues	$	747,145		$	881		$	478,841		$	—		$	1,226,867
Operating income (loss)	169,515		(3)	(7,710		)	21,270			(13,475		)	169,600
Equity income from real estate ventures	—			—			1,278			—			1,278
Depreciation and amortization	8,717			—			9,372			1,307			19,396
Capital expenditures	3,305			—			4,554			—			7,859
Nine months ended September 30, 2014
Revenues	$	748,468		$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395		(4)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—			—			3,002			—			3,002
Depreciation and amortization	7,934			—			9,709			956			18,599
Capital expenditures	7,911			—			5,614			7,221			20,746

⁽¹⁾ Operating income includes $5,715 of income from MSA Settlement, $3,750 of litigation judgment expense and $1,548 of restructuring expense.

⁽²⁾ Operating income includes $225of litigation judgment expense.

⁽³⁾ Operating income includes $5,715 of income from MSA Settlement, $5,843 of litigation judgment expense, $1,548 of restructuring expense, and $1,607 of pension settlement expense.

⁽⁴⁾  Operating income includes $1,419 of income from MSA Settlement and $1,725 of litigation judgment expense.

40

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

13. 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, 2015, management believed that the Company was in compliance with all covenants under the indentures of the 7.75% Senior Secured Notes.

41

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2015
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	94,546		$	26,842	$	124,959	$	—		$	246,347
Investment securities available for sale	242,529			45,847		—		—			288,376
Accounts receivable - trade, net	—			12,099		8,013		—			20,112
Intercompany receivables	1,083			—		—		(1,083		)	—
Inventories	—			90,695		—		—			90,695
Deferred income taxes	—			1,939		—		(1,939		)	—
Income taxes receivable, net	11,822			—		—		(11,822		)	—
Restricted assets	—			1,420		1,414		—			2,834
Other current assets	912			5,103		31,809		—			37,824
Total current assets	350,892			183,945		166,195		(14,844		)	686,188
Property, plant and equipment, net	1,944			55,133		19,290		—			76,367
Real estate held for sale, net	—			—		22,963		—			22,963
Long-term investments	53,132			—		516		—			53,648
Investments in real estate ventures	—			—		194,052		—			194,052
Investments in consolidated subsidiaries	525,652			—		—		(525,652		)	—
Restricted assets	1,709			16,938		—		—			18,647
Goodwill and other intangible assets, net	—			107,511		157,969		—			265,480
Prepaid pension costs	—			27,440		—		—			27,440
Other assets	40,528			11,790		1,698		—			54,016
Total assets	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	7,731	$	226	$	—		$	7,957
Current portion of employee benefits	—			931		—		—			931
Intercompany payables	—			—		1,083		(1,083		)	—
Income taxes payable, net	—			12,005		3		(11,822		)	186
Litigation accruals and current payments due under the Master Settlement Agreement	—			100,592		—		—			100,592
Deferred income taxes, net	9,260			—		—		(1,939		)	7,321
Other current liabilities	24,329			41,751		45,723		—			111,803
Total current liabilities	33,589			163,010		47,035		(14,844		)	228,790
Notes payable, long-term debt and other obligations, less current portion	871,268			8,407		15		—			879,690
Fair value of derivatives embedded within convertible debt	149,739			—		—		—			149,739
Non-current employee benefits	33,651			16,262		—		—			49,913
Deferred income taxes, net	24,862			35,905		35,730		—			96,497
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,535			44,356		4,108		—			50,999
Total liabilities	1,115,644			267,940		86,888		(14,844		)	1,455,628
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(141,787		)	134,817		390,835		(525,652		)	(141,787		)
Non-controlling interest	—			—		84,960		—			84,960
Total stockholders' (deficiency) equity	(141,787		)	134,817		475,795		(525,652		)	(56,827		)
Total liabilities and stockholders' (deficiency) equity	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801

42

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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
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	492,510			197,148		138,315		681			828,654
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
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	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071
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, net	17,452			11,027		—		—			28,479
Other current liabilities	36,653			58,677		31,425		—			126,755
Total current liabilities	79,989			127,354		32,879		681			240,903
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, net	23,539			32,301		38,670		—			94,510
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	921			51,775		4,383		—			57,079
Total liabilities	1,158,353			236,022		75,963		681			1,471,019
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' (deficiency) equity	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071

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, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	264,480		$	185,563		$	(109	)	$	449,934
Expenses:
Cost of sales	—			174,839			121,078			—			295,917
Operating, selling, administrative and general expenses	6,372			20,712			52,139			(109		)	79,114
Litigation settlement and judgment expense	—			3,750			—			—			3,750
Management fee expense	—			2,562			—			(2,562		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(6,372		)	61,069			12,346			2,562			69,605
Other income (expenses):
Interest expense	(31,609		)	(1,288		)	(1		)	—			(32,898		)
Change in fair value of derivatives embedded within convertible debt	7,044			—			—			—			7,044
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Equity loss from investments	(579		)	—			—			—			(579		)
Loss on sale of investment securities available for sale	(821		)	—			—			—			(821		)
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Equity income in consolidated subsidiaries	32,335			—			—			(32,335		)	—
Management fee income	2,562			—			—			(2,562		)	—
Other, net	(61		)	(111		)	305			—			133
(Loss) income before provision for income taxes	(1,725		)	51,683			11,734			(32,335		)	29,357
Income tax benefit (expense)	13,930			(24,043		)	(3,395		)	—			(13,508		)
Net income	12,205			27,640			8,339			(32,335		)	15,849
Net income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Net income attributed to Vector Group Ltd.	12,205			27,640			4,695			(32,335		)	12,205
Comprehensive income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Comprehensive (loss) income attributed to Vector Group Ltd.	$	(11,685	)	$	18,484		$	4,695		$	(23,179	)	$	(11,685	)

44

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 from 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
(Loss) income 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 Ltd.	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

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, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	748,394		$	478,841		$	(368	)	$	1,226,867
Expenses:
Cost of sales	—			507,833			309,306			—			817,139
Operating, selling, administrative and general expenses	20,266			64,604			148,235			(368		)	232,737
Litigation settlement and judgment expense	—			5,843			—			—			5,843
Management fee expense	—			7,687			—			(7,687		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(20,266		)	160,879			21,300			7,687			169,600
Other income (expenses):
Interest expense	(93,243		)	(3,158		)	(4		)	—			(96,405		)
Change in fair value of derivatives embedded within convertible debt	18,760			—			—			—			18,760
Equity income from real estate ventures	—			—			1,278			—			1,278
Equity loss from investments	(2,273		)	—			—			—			(2,273		)
(Loss) gain on sale of investment securities available for sale	(1,157		)	13,175			—			—			12,018
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Gain on liquidation of long-term investment	—			—			—			—			—
Equity income in consolidated subsidiaries	104,083			—			—			(104,083		)	—
Management fee income	7,687			—			—			(7,687		)	—
Other, net	1,859			409			1,286			—			3,554
Income before provision for income taxes	11,226			163,318			23,860			(104,083		)	94,321
Income tax benefit (expense)	39,803			(69,450		)	(7,904		)	—			(37,551		)
Net income	51,029			93,868			15,956			(104,083		)	56,770
Net income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Net income attributed to Vector Group Ltd.	51,029			93,868			10,215			(104,083		)	51,029
Comprehensive income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Comprehensive income attributed to Vector Group Ltd.	$	26,357		$	84,073		$	10,215		$	(94,288	)	$	26,357

46

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
	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
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income from investments	1,462			—			—			—			1,462
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

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, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	84,832		$	168,095		$	31,660		$	(144,569	)	$	140,018
Cash flows from investing activities:
Sale of investment securities	146,614			14,415			—			—			161,029
Maturities of investment securities	2,653			—			—			—			2,653
Purchase of investment securities	(156,521		)	(6,324		)	—			—			(162,845		)
Proceeds from sale or liquidation of long-term investments	—			—			182			—			182
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in real estate ventures	—			—			(43,280		)	—			(43,280		)
Distributions from investments in real estate ventures	—			—			11,205			—			11,205
Increase in cash surrender value of life insurance policies	(766		)	(459		)	—			—			(1,225		)
Increase in restricted assets	(2		)	(6,870		)	—			—			(6,872		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Investments in subsidiaries	(53,511		)	—			—			53,511			—
Proceeds from sale of fixed assets	—			3			—			—			3
Capital expenditures	—			(3,305		)	(4,554		)	—			(7,859		)
Repayments of notes receivable	1,106			—			4,000			—			5,106
Pay downs of investment securities	5,743			—			—			—			5,743
Proceeds from sale of preferred securities	—			—			1,000			—			1,000
Investments in real estate held for sale	—			—			(12,512		)	—			(12,512		)
Net cash used in investing activities	(64,684		)	(2,540		)	(48,369		)	53,511			(62,082		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			1,519			—			—			1,519
Deferred financing costs	—			(624		)	—			—			(624		)
Repayments of debt	—			(4,786		)	(182		)	—			(4,968		)
Borrowings under revolver	—			130,691			—			—			130,691
Repayments on revolver	—			(146,655		)	—			—			(146,655		)
Capital contributions received	—			5,633			47,878			(53,511		)	—
Intercompany dividends paid	—			(134,215		)	(10,354		)	144,569			—
Dividends and distributions on common stock	(139,430		)	—			—			—			(139,430		)
Distributions to non-controlling interest	—			—			(564		)	—			(564		)
Proceeds from exercise of Vector options	1,321			—			—			—			1,321
Tax benefit of options exercised	756			—			—			—			756
Net cash (used in) provided by financing activities	(137,353		)	(148,437		)	36,778			91,058			(157,954		)
Net (decrease) increase in cash and cash equivalents	(117,205		)	17,118			20,069			—			(80,018		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	94,546		$	26,842		$	124,959		$	—		$	246,347

48

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	173,046			—			—			—			173,046
Maturities of investment securities	517			—			—			—			517
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 investments in 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		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Pay downs of investment securities	690			—			—			—			690
Proceeds from sale of fixed assets	—			4			—			—			4
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from issuance of debt	408,750			40,168			—			(35,000		)	413,918
Deferred 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

49

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, 2014 and Notes thereto, included in our 2014 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, 2015.

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 (“Liggett”) and Vector Tobacco Inc. (“Vector Tobacco”) subsidiaries, 

• the sale of electronic cigarettes (“e-cigarettes”) in the United States through our Zoom E-Cigs LLC (“Zoom”) subsidiary, and

• the real estate business through our New Valley LLC (“New Valley”) subsidiary, which is seeking to acquire additional operating companies and real estate properties. New Valley owns 70.59% of Douglas Elliman Realty, LLC (“Douglas Elliman Realty”), which operates the largest residential brokerage company in the New York metropolitan area.

Zoom entered the United States e-cigarette market in limited retail distribution outlets in 2013. Zoom’s operations are included in our “E-Cigarettes” reporting segment. Our exposure to Zoom, as of September 30, 2015, was approximately $1,965, which was primarily comprised of Zoom's inventory and point-of-sale marketing material. We have seen significant changes in the e-cigarette market over the past year with apparent declines in the sales of disposable and rechargeable e-cigarettes while open-system vapor products that feature refillable tanks and use low-cost flavored liquids have demonstrated mixed results. Additionally, we believe uncertainties exist related to the regulation of e-cigarettes, including open-system vapor products. Given this backdrop, our primary focus on e-cigarettes is to stay prepared to pursue opportunities if they occur.

Recent Developments

Liggett Restructuring. On October 5, 2015, our tobacco segment commenced a restructuring of its operations by realigning its sales force and adjusting its business model to more efficiently serve its chain and independent accounts. In connection with the restructuring, the segment's workforce is expected to decline by approximately 95 full-time employees (or 17% of the tobacco segment's workforce).

The total costs of the restructuring are expected to be approximately $6,000 with approximately $1,500 expensed in the third quarter of 2015 and the remainder during the fourth quarter. The restructuring costs are included as “Restructuring expenses” in our condensed consolidated statements of operations and are attributable to our Tobacco segment.

The restructuring plan is expected to yield approximately $10,000 of annual cost savings consisting of approximately $8,000 in reduced sales, general and administrative expenses and approximately $2,000 in reduced manufacturing expenses, beginning in the fourth quarter of 2015. We plan to reinvest the entire amount of cost savings into the tobacco segment’s promotional and marketing programs.

50

Restructuring and impairment expense recognized for the three and nine months ended September 30, 2015 consisted of $1,094 related to the elimination of sales and administrative positions and $454 related to a reserve for excess marketing point-of-sale material inventories.

As part of the restructuring plan, we offered voluntary termination and early retirement benefits to manufacturing employees meeting certain age and service requirements. The package consists of enhanced pension benefits or severance based on past service and, for some employees, ongoing company contributions to insurance coverage until age 65. We believe that approximately $4,000 will be expensed in the fourth quarter of 2015 related to these benefits. All pension benefits are expected to be paid from existing pension plan assets.

We also anticipate a fourth-quarter expense of approximately $220 for contract terminations related to cars leased on behalf of the terminated sales employees and an additional $200 for other related restructuring expenses.

We expect approximately $1,100 of non-pension related severance and benefits will be paid in the fourth quarter of 2015. Payment of the remaining $400 of severance and benefits costs is expected in 2016. All non-pension-related restructuring payments are expected to be funded by ongoing operations and cash reserves.

Our estimates of the costs and savings of the restructuring and the timing of various events are based on a number of assumptions and actual results may differ materially from these estimates.

Liggett NPM. In October 2015, substantially all of the Participating Manufacturers settled the NPM Adjustment dispute with the state of New York for 2004 - 2014 and agreed to a mechanism for potential future credits against the Participating Manufacturers' MSA payments for 2015 forward. As a result of the settlement, Liggett reduced cost of sales by approximately $5,700 for the three and nine months ended September 30, 2015.

Liggett Credit Facility. On January 14, 2015, our subsidiaries, Liggett and 100 Maple LLC (“Maple”), entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), dated as of January 14, 2015, with Wells Fargo Bank, National Association (“Wells Fargo”), as agent and lender. The Credit Agreement governs a $60,000 credit facility (the “Credit Facility”) that consists of a revolving credit facility of up to $60,000 borrowing capacity (the “Revolver”) and a $3,600 term loan (the “Term Loan”) that is within the $60,000 commitment under the Credit Facility and reduces the amount available under the Revolver. All borrowings under the Credit Facility (other than the Term Loan) are limited to a borrowing base equal to roughly (1) the lesser of (a) 85% of the net amount of eligible accounts receivable and (b) $10,000 plus (2) the lesser of (a) the sum of (I) 80% of the value of eligible inventory consisting of packaged cigarettes plus (II) the lesser of (x) 60% multiplied by Liggett’s eligible cost of eligible inventory consisting of leaf tobacco and (y) 85% of the net orderly liquidation value of eligible inventory consisting of leaf tobacco and (b) $60,000, less (3) certain reserves against accounts receivable, inventory, bank products or other items which Wells Fargo, as agent, may establish from time to time in its permitted discretion. The obligations under the Credit Facility are collateralized on a first priority basis by all inventories, receivables and certain other personal property of Liggett and Maple, a mortgage on Liggett’s manufacturing facility and certain real property of Maple, subject to certain permitted liens. The Credit Facility amended and restated Liggett’s existing $50,000 credit facility with Wells Fargo and Maple’s existing $3,600 term loan with Wells Fargo. The term of the Credit Facility expires on March 31, 2020. Prime rate loans under the Credit Facility bear interest at a rate equal to the greatest of (i) the Federal Funds rate plus 0.50%, (ii) LIBOR plus 1.0% and (ii) the prime rate of Wells Fargo. LIBOR rate loans under the Credit Facility bear interest at a rate equal to LIBOR plus 2.25%. Monthly principal payments of $25 are due under the Term Loan on the first day of each month with the unpaid principal balance due at maturity on March 31, 2020. The Credit Facility contains customary affirmative and negative covenants, including covenants that limit Liggett’s, Maple’s and their subsidiaries’ ability to incur, create or assume certain indebtedness, to incur or assume certain liens, to purchase, hold or acquire certain investments, to declare or make certain dividends and distributions and to engage in certain mergers, consolidations and asset sales. The Credit Facility also requires us to comply with specified financial covenants, including that Liggett's earnings before interest, taxes, depreciation and amortization, as defined under the Credit Facility, on a trailing twelve month basis, shall not be less than $100,000 if Liggett's excess availability, as defined under the Credit Facility, is less than $20,000. The covenants also require that annual capital expenditures, as defined under the Credit Facility (before a maximum carryover amount of $10,000), shall not exceed $20,000 during any fiscal year. The Credit Facility also contains customary events of default.

Vector 6.75% Variable Interest Senior Convertible Note due 2015. In February 2015, the holder of the 6.75% Variable Interest Senior Convertible Note due 2015, converted the remaining $25,000 principal balance of the Note into 2,338,930 of our common shares.

Liggett Retirement Window. Liggett recorded a charge of $0 and $1,607 for the three and nine months ended September 30, 2015 in connection with a window offered to terminated participants in two Defined Benefit Plans in 2015.

51

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, 2014. 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, 2014. 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 included elsewhere in this report. The condensed consolidated financial statements include the accounts of VGR Holding, Liggett, Vector Tobacco, Liggett Vector Brands, New Valley and other less significant subsidiaries.

For purposes of this discussion and other consolidated financial reporting, our significant business segments for the three and nine months ended September 30, 2015 and 2014 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, Sagaponack and investments in real estate ventures.

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2015				2014				2015				2014
Revenues:
Tobacco	$	264,170			$	264,520			$	747,145			$	748,468
E-Cigarettes	201				1,608				881				9,977
Real Estate	185,563				153,748				478,841				415,280
Total revenues	$	449,934			$	419,876			$	1,226,867			$	1,173,725
Operating income (loss):
Tobacco	$	63,630		(1)	$	52,993		(2)	$	169,515		(3)	$	147,395		(4)
E-Cigarettes	(2,146		)		(2,910		)		(7,710		)		(7,100		)
Real Estate	12,227				16,222				21,270				36,867
Corporate and Other	(4,106		)		(3,321		)		(13,475		)		(11,148		)
Total operating income	$	69,605			$	62,984			$	169,600			$	166,014

____________________

⁽¹⁾   Operating income includes includes $5,715 of income from MSA Settlement, $3,750 of litigation judgment expense and $1,548 of restructuring expense.

⁽²⁾ Operating income includes $225 of litigation judgment expense.

⁽³⁾   Operating income includes $5,715 of income from MSA Settlement, $5,843 of litigation judgment expense, $1,548 of restructuring expense, and $1,607 of pension settlement expense.

⁽⁴⁾  Operating income includes $1,419 of income from MSA Settlement and $1,725 of litigation judgment expense.

52

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Revenues. Total revenues were $449,934 for the three months ended September 30, 2015 compared to $419,876 for the three months ended September 30, 2014. Total revenues increased by $30,058 (7.2%) due to an increase in Real Estate revenues of $31,815 which was primarily related to Douglas Elliman's brokerage revenues. This was offset by a decline in Zoom e-cigarette revenues of $1,407 and a decline in Tobacco revenues of $350.

Cost of Sales. Total cost of sales were $295,917 for the three months ended September 30, 2015 compared to $287,236 for the three months ended September 30, 2014. The $8,681 (3.0%) increase in cost of sales was due to an increase in Real Estate cost of sales of $24,636 related to an increase of real estate commission expense at Douglas Elliman. This was offset by a decline in Tobacco cost of sales of $15,310 related to a lower net MSA expense due to MSA settlements in 2015, the elimination of the tobacco quota buyout program in 2015 and decreased sales volume as well as a decline in Zoom e-cigarette brand cost of sales of $645.

Expenses. Operating, selling, general and administrative expenses were $79,114 for the three months ended September 30, 2015 compared to $69,431 for the same period last year. This was an increase of $9,683 (13.9%) of which $11,174 was due to an increase in Real Estate operating, selling and administrative expenses primarily related to Douglas Elliman's brokerage business and an increase in Corporate and Other expense of $787. This was offset by a decline in Zoom operating, selling, general and administrative expenses of $1,526 and a decline in Tobacco operating, selling, general and administrative expenses of $752.

Operating income (loss). Operating income was $69,605 for the three months ended September 30, 2015 compared to $62,984 for the same period last year, an increase of $6,621 (10.5%). The increase was primarily related to an increase in Tobacco operating income of $10,637 and a decline in operating losses related to Zoom of $764. This was offset by a decline in Real Estate operating income of $3,995 and an increase in Corporate and Other of $785.

Other income (expenses). Other expenses were$40,248 and $31,315 for the three months ended September 30, 2015 and 2014, respectively. For the three months ended September 30, 2015, other expenses primarily consisted of interest expense of $32,898, impairment of investment securities available for sale of $12,211, loss on sale of investment securities available for sale of $821, equity loss on long-term investments of $579 and equity loss from real estate ventures of $916. This was offset by income of $7,044 from changes in fair value of derivatives embedded within convertible debt and other income of $133. For the three months ended September 30, 2014, other expenses primarily consisted of interest expense of $44,034 and acceleration of interest expense related to the debt conversion of the 6.75% Variable Interest Senior Convertible Exchange Notes of $994. The higher interest expense in 2014 was primarily attributable to higher average debt balances and higher non-cash interest expense in 2014. This was offset by income of $7,127 from changes in fair value of derivatives embedded within convertible debt, equity income from real estate ventures of $3,258, other income of $2,466, equity income on long-term investments of $829 and gain on sale of investment securities available for sale of $33.

Income before provision for income taxes. Income before income taxes for the three months ended September 30, 2015 was $29,357 compared to $31,669 for the three months ended September 30, 2014.

Income tax expense. Income tax expense was $13,508 for the three months ended September 30, 2015 compared to $11,964 for the three months ended September 30, 2014. Our provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual income before provision for income taxes in accordance with guidance on accounting for income taxes on interim periods. For the three months ended September 30, 2015, our income tax expense increased by $1,539 due to changes in the anticipated effective income tax rate for 2015 and $412 due primarily to a change in the marginal state tax rate as a result of recent state legislations changes and the results of a recent state income tax audits.

Tobacco.

Tobacco Revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in May 2015 and $0.70 per carton in November 2014.

All of our Tobacco sales were in the discount category in 2015 and 2014. For the three months ended September 30, 2015, tobacco revenues were $264,170 compared to $264,520 for the three months ended September 30, 2014. Revenues declined by $350 (0.1%) due to a favorable price variance of $9,031 offset by a 2.2%decline in sales volume of $9,381 (approximately 50.6 million units).

Tobacco Cost of Sales. Our Tobacco cost of sales declined from $189,728 for the three months ended September 30, 2014 to $174,418 for the three months ended September 30, 2015. The major components of our Tobacco cost of sales are as follows:

53

		Three Months Ended
		September 30,
		2015		2014
Manufacturing overhead, raw materials and labor		$	33,143	$	33,315
Federal Excise Taxes, net		112,773		115,326
Tobacco quota buyout expense (1)		—		6,425
FDA expense		4,416		4,012
MSA expense, net of market share exemption (2)		24,086		30,650
	Total cost of sales	$	174,418	$	189,728

⁽¹⁾ The quarterly assessments due under the Fair and Equitable Tobacco Reform Act (shown as “Tobacco quota buyout expense” above) expired at the end of 2014.

⁽²⁾ Includes $5,715 of income from MSA Settlement for the three months ended September 30, 2015.

Tobacco gross profit was $89,752 for the three months ended September 30, 2015 compared to $74,792 for the three months ended September 30, 2014. The $14,960 (20.0%) increase was due to higher margins associated with price increases primarily on the PYRAMID brand, the absence of the tobacco quota buyout expense and a decrease in net MSA expenses due to lower volume. This increase was partially offset by increased FDA expense, which increased in 2015 on a per-unit basis. As a percentage of revenues (excluding Federal Excise Taxes), Tobacco gross profit was 59.3% in the 2015 period compared to 50.1% in the comparable 2014 period.

Tobacco expenses. Tobacco operating, selling, general and administrative expenses were $20,822 and $21,574 for the three months ended September 30, 2015 and 2014, respectively. The decline of $752 primarily related to a decrease in professional fees.

Total tobacco product liability legal expenses, including settlements and judgments, were $5,355 and $2,108 for the three months ended September 30, 2015 and 2014, respectively.

Tobacco operating income. Tobacco operating income was $63,630 for the three months ended September 30, 2015 compared to $52,993 for the same period last year. The Tobacco operating income increase of $10,637 (20.1%) was primarily due to higher margins associated with price increases primarily on the PYRAMID brand, $5,715 of income from MSA settlement and the absence of the tobacco quota buyout expense. This was partially offset by increased product liability legal expense and restructuring and impairment charges.

E-Cigarettes.

E-Cigarettes revenues were $201 for the three months ended September 30, 2015 compared to $1,608 for three months ended September 30, 2014. Revenues declined because of lower sales volume and increased product returns and sales reserves.

Our E-Cigarettes cost of sales were $421 for the three months ended September 30, 2015 compared to $1,066 for the three months ended September 30, 2014. Cost of sales declined due to lower sales volume.

E-Cigarettes operating, selling, general and administrative expenses were $1,928 and $3,454 for the three months ended September 30, 2015 and 2014, respectively. The decline was due to lower advertising and marketing expenses. E-Cigarettes operating losses were $2,146 and $2,910 for the three months ended September 30, 2015 and 2014, respectively.

Real Estate.

Real Estate Revenues. Real Estate revenues were $185,563 and $153,748 for the three months ended ended September 30, 2015 and 2014, respectively. Real Estate revenues increased by $31,815, which is primarily related to Douglas Elliman's Commission and other brokerage income.

54

Real Estate revenues and cost of sales for the three months ended September 30, 2015 and 2014 were as follows:

	Three Months Ended
	September 30,
	2015		2014
Real Estate Revenues:
Commission and other brokerage income	$	176,742	$	145,407
Property management income	6,906		6,998
Title fees	1,352		800
Sales on facilities primarily from Escena	481		543
Other	82		—
Total real estate revenues	$	185,563	$	153,748
Real Estate Cost of Sales:
Commission and other brokerage income	$	120,021	$	95,434
Cost of sales on facilities primarily from Escena	840		905
Title fees	217		103
Other	—		—
Total real estate cost of sales	$	121,078	$	96,442

^{___________________________________} 

Brokerage Cost of sales. Douglas Elliman commission cost of sales increased by $24,587 due to increased sales volume.

Real Estate expenses. Real Estate operating, selling, general and administrative expenses were $52,258 and $41,084 for the three months ended September 30, 2015 and 2014, respectively. Real Estate operating, selling, general and administrative expenses increased by $11,174 primarily related to an increase of expenses at Douglas Elliman related to its strategic investments fueled by its expansion into new markets, its development marketing division and increased advertising and marketing expenses to strengthen the long-term value of the Douglas Elliman brand name.

Real Estate operating income. The Real Estate segment had operating income of $12,227 and $16,222 for the three months ended September 30, 2015 and 2014, respectively. The decline of $3,995 was primarily related to an increase in Douglas Elliman operating, selling, general and administrative expenses.

Corporate and Other.

Corporate and Other operating loss. Corporate and Other operating loss was $4,106 for the three months ended September 30, 2015 compared to $3,321 for 2014. Corporate and Other operating losses increased by $785 primarily as a result of increased professional fees and increased non-cash compensation expense for the three months ended September 30, 2015.

Nine Months EndedSeptember 30, 2015 Compared to Nine Months EndedSeptember 30, 2014

Revenues. Total revenues were $1,226,867 for the nine months ended September 30, 2015 compared to $1,173,725 for the nine months ended September 30, 2014. The $53,142 (4.5%) increase in revenues was due to an increase in Real Estate revenues of $63,561 primarily related to Douglas Elliman's brokerage revenues, offset by a $9,096decline in E-Cigarettes revenues and a $1,323 decline in Tobacco revenues.

55

Cost of Sales. Total cost of sales were $817,139 for the nine months ended September 30, 2015 compared to $805,555 for the nine months ended September 30, 2014. The $11,584 (1.4%) increase in cost of sales was due to an increase in Real Estate cost of sales of $47,775 related to an increase of real estate commission expense at Douglas Elliman. This was offset by a $31,352decline in Tobacco cost of sales primarily related to a lower net MSA expense due to MSA settlements in 2015, the elimination of the tobacco quota buyout program in 2015 and decreased sales volume as well as a $4,839 decline in Zoom e-cigarette cost of sales.

Expenses. Operating, selling, general and administrative expenses were $232,737 for the nine months ended September 30, 2015 compared to $200,431 for the same period last year. This was an increase of $32,306 (16.1%) of which $31,383 was related to the operating, selling and administrative expenses of Real Estate, $2,242 to Tobacco operating, selling and administrative expenses and an increase in Corporate and Other expenses of $2,327. This was offset by a decline in operating, selling, general and administrative expenses in the E-Cigarettes segment of $3,646.

Operating income. Operating income was $169,600 for the nine months ended September 30, 2015 compared to $166,014 for the same period last year, an increase of $3,586 (2.2%). Tobacco operating income increased by $22,120. This was offset by a $15,597 decline in Real Estate operating income, a $610 increase in operating losses related to E-Cigarettes and a $2,327 increase in Corporate and Other expenses.

Other income (expenses). Other expenses were$75,279 and $108,742 for the nine months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015, other expenses primarily consisted of interest expense of $96,405, impairment of investment securities available for sale of $12,211 and equity loss on long-term investments of $2,273. This was offset by income of $18,760 from changes in fair value of derivatives embedded within convertible debt, gain on sale of investment securities available for sale of $12,018, other income of $3,554 and equity income on real estate ventures of $1,278. 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, and loss on sale of investment securities available for sale of $38. The higher interest expense in 2014 was primarily attributable to higher average debt balances. This was offset by interest and other income of $8,167, income of $7,447 from changes in fair value of derivatives embedded within convertible debt, equity income on real estate ventures of $3,002 and equity income on long-term investments of $1,462.

Income before provision for income taxes. Income before income taxes was $94,321 and $57,272 for the nine months ended September 30, 2015 and 2014, respectively.

Income tax expense. Income tax expense was $37,551 and $21,007 for the nine months ended September 30, 2015 and 2014, respectively. Our provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual income before provision for income taxes in accordance with guidance on accounting for income taxes on interim periods. For the nine months ended September 30, 2015, our income tax expense was increased by $313 due primarily to a change in the marginal state tax rate as a result of recent state legislations changes, the rate differential in other comprehensive income and the results of a recent state income tax audits.

Tobacco.

Tobacco Revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in May 2015, $0.60 per carton in May 2014 and $0.70 per carton in November 2014.

All of our Tobacco sales were in the discount category in 2015 and 2014. For the nine months ended September 30, 2015, Tobacco revenues were $747,145 compared to $748,468 for the nine months ended September 30, 2014. Revenues declined by $1,323 (0.2%) due to a 2.6%decline in sales volume of $28,841 (approximately 166.5 million units), offset by a favorable price variance of $27,518.

Tobacco Cost of Sales. Our Tobacco cost of sales declined from $537,667 for the nine months ended September 30, 2014 to $506,315 for the nine months ended September 30, 2015. The major components of our Tobacco cost of sales are as follows:

56

		Nine Months Ended
		September 30,
		2015		2014
Manufacturing overhead, raw materials and labor		$	95,106	$	94,779
Federal Excise Taxes, net		319,044		327,434
Tobacco quota buyout expense (1)		664		20,697
FDA expense		13,980		13,017
MSA expense, net of market share exemption (2)		77,521		81,740
	Total cost of sales	$	506,315	$	537,667

⁽¹⁾ The quarterly assessments due under the Fair and Equitable Tobacco Reform Act (shown as “Tobacco quota buyout expense” above) expired at the end of 2014. The $664 for the nine months ended September 30, 2015 represents a final assessment for Q4 2014, which was received in Q2 2015.

⁽²⁾ Includes $5,715 and $1,419 of income from MSA Settlement for the nine months ended September 30, 2015 and 2014, respectively.

Tobacco gross profit was $240,830 for the nine months ended September 30, 2015 compared to $209,382 for the nine months ended September 30, 2014. The $31,448 (15.0%) increase was due to higher margins associated with the absence of the tobacco quota buyout expense, price increases and decreased MSA expense. As a percentage of revenues (excluding Federal Excise Taxes), Tobacco gross profit was 56.3% in the 2015 period and 50.1% in the 2014 period.

Tobacco expenses. Tobacco operating, selling, general and administrative expenses were $63,923 for the nine months ended September 30, 2015 compared to $61,681 for the nine months ended September 30, 2014. The $2,242increase in expenses primarily relates to a pension settlement charge of $1,607.

Tobacco product liability legal expenses, including settlements and judgments, were $11,068 and $7,282 for the nine months ended September 30, 2015 and 2014, respectively.

Tobacco operating income. Tobacco operating income was $169,515 for the nine months ended September 30, 2015 compared to $147,395 for the same period last year. The Tobacco operating income increase of $22,120 (15.0%) was due to higher margins associated with price increases, the absence of the tobacco quota buyout expense and a net change of $4,296 of income from MSA settlement. This was partially offset by increased manufacturing expense, increased FDA expense which increased in 2015 on a per-unit basis and increased operating, selling, general and administrative expenses.

E-Cigarettes.

E-Cigarettes revenues were $881 for the nine months ended September 30, 2015 compared to $9,977 for nine months ended September 30, 2014. Revenues declined because of lower sales volume and increased per unit promotional spending.

Our E-Cigarettes cost of sales were $1,518 for the nine months ended September 30, 2015 compared to $6,357 for the nine months ended September 30, 2014. Cost of sales decreased by $4,839 due to lower sales volumes.

E-Cigarettes operating, selling, general and administrative expenses were $7,074 and $10,720 for the nine months ended September 30, 2015 and 2014, respectively. The decline was due to lower advertising and marketing expenses. Operating losses from E-Cigarettes were $7,710 and $7,100 for the nine months ended September 30, 2015 and 2014, respectively.

Real Estate.

Real Estate Revenues. Real Estate revenues were $478,841 and $415,280 for the nine months ended ended September 30, 2015 and 2014, respectively. Real Estate revenues increased by $63,561 (15.3%), primarily related to an increase of $76,730 in Douglas Elliman's Commission and other brokerage income and offset by the absence of the $14,400 revenue from the sale of Indian Creek in 2014.

.

57

Real Estate revenues and cost of sales for the nine months ended ended September 30, 2015 were as follows:

	Nine Months Ended
	September 30,
	2015		2014
Real Estate Revenues:
Commission and other brokerage income	$	449,468	$	372,738
Property management income	21,592		22,111
Title fees	3,303		2,134
Indian Creek	—		14,400
Sales on facilities primarily from Escena	4,005		3,897
Other	473		—
Total real estate revenues	$	478,841	$	415,280
Real Estate Cost of Sales:
Commission and other brokerage income	$	305,885	$	248,213
Indian Creek cost of sales	—		9,987
Cost of sales on facilities primarily from Escena	2,895		3,052
Title fees	526		279
Total real estate cost of sales	$	309,306	$	261,531

Brokerage Cost of sales. Douglas Elliman commission cost of sales increased by $57,672 due to increased sales volume.

Real Estate expenses. Real Estate operating, selling, general and administrative expenses were $148,265 and $116,882 for the nine months ended September 30, 2015 and 2014, respectively. The increase of $31,383 was primarily due to an increase of expenses at Douglas Elliman related to its strategic investments fueled by its expansion into new markets, its development marketing division and increased advertising and marketing expenses to strengthen the long-term value of the Douglas Elliman brand name.

Real Estate operating income. The Real Estate segment had operating income of $21,270 and $36,867 for the nine months ended September 30, 2015 and 2014, respectively. The decrease in operating income of $15,597 was primarily related to an increase in in Douglas Elliman operating, selling, general and administrative expenses, offset by higher profits and the absence of the operating income related to the 2014 sale of Indian Creek.

Corporate and other.

Corporate and other loss. The operating loss at the corporate segment was $13,475 for the nine months ended September 30, 2015 compared to $11,148 for the same period in 2014. The increase was primarily due to increased non-cash compensation expense and increased professional fees for the nine months ended September 30, 2015.

58

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, 2015:

	(Dollars in Thousands. Area and Unit Information in Ones)
	Location	Date of Initial Investment	Percentage Owned		Net Cash Invested		Cumulative Earnings (Losses)			Carrying Value as of September 30, 2015		Future Capital Commit- ments from New Valley (1)		Projected Residential and/or Hotel Area		Projected Commercial Space		Projected Number of Residential Lots, Units and/or Hotel Rooms		Projected Construction Start Date	Projected Construction End Date
Sagaponack	Sagaponack, NY	April 2015	100	%	$	12,512	$	—		$	12,512	$	—	TBD		N/A		TBD		N/A	N/A
Escena, net	Master planned community, golf course, restaurant and shop in Palm Springs, CA	March 2008	100	%	1,975		8,476			10,451		—		450	Acres			667 450	R Lots H	N/A	N/A
Real estate held for sale, net					$	14,487	$	8,476		$	22,963	$	—
10 Madison Square Park West (1107 Broadway)	Flatiron District/NoMad neighborhood, Manhattan, NY	October 2011	5.0	%	$	7,345	$	2,177		$	9,522	—		260,000	SF	20,000	SF	124	R	August 2012	May 2016
The Marquand	Upper East Side, Manhattan, NY	December 2011	18.0	%	7,000		6,900			13,900		—		90,000	SF	—		29	R	June 2012	August 2015
11 Beach Street	TriBeCa, Manhattan, NY	June 2012	49.5	%	12,328		(400		)	11,928		—		97,000	SF	—		27	R	May 2014	December 2016
20 Times Square (701 Seventh Avenue) (2)	Times Square, Manhattan, NY	August 2012	7.1	%	13,095		—			13,095		—		280,000	SF	80,000	SF	452	H	September 2013	January 2018
111 Murray Street	TriBeCa, Manhattan, NY	May 2013	9.5	%	16,114		—			16,114		—		330,000	SF	TBD		157	R	September 2014	September 2018
357 West (160 Leroy Street) (2), (3)	West Greenwich Village, Manhattan, NY	March 2013	3.1	%	1,950		—			1,950		—		130,000	SF	—		50	R	Fall 2015	March 2018
PUBLIC Chrystie House (Chrystie Street)	Lower East Side, Manhattan, NY	December 2012	18.4	%	5,297		—			5,297		—		217,000	SF	43,000	SF	11 367	R H	June 2014	March 2017
The Dutch (25-19 43rd Avenue)	Long Island City, NY	May 2014	9.9	%	980		—			980				63,000	SF	—		86	R	September 2014	January 2017
Queens Plaza (23-10 Queens Plaza South)	Long Island City, NY	December 2012	45.4	%	14,711		21			14,732		—		260,000	SF	25,000		391	R	March 2014	April 2016
87 Park (8701 Collins Avenue)	Miami Beach, FL	December 2013	15.0	%	6,000		(346		)	5,654		—		160,000	SF	TBD		70	R	October 2015	August 2017
125 Greenwich Street (3)	Financial District, Manhattan, NY	August 2014	13.3	%	11,458		(265		)	11,193		—		306,000	SF	16,000		275	R	March 2015	March 2018
West Hollywood Edition (9040 Sunset Boulevard)	West Hollywood, CA	October 2014	48.5	%	5,604		—			5,604		—		295,000	SF	TBD		20 190	R H	May 2015	April 2018
76 Eleventh Avenue	West Chelsea, Manhattan, NY	May 2015	5.1	%	17,000		—			17,000		—		620,000	SF	48,000	SF	250	H	September 2016	March 2019
Monad Terrace	Miami Beach, FL	May 2015	31.3	%	6,438		—			6,438		—		160,000	SF	—		TBD	R	May 2016	May 2018
Condominium and Mixed Use Development					$	125,320	$	8,087		$	133,407	$	—
Maryland Portfolio	Primarily Baltimore County, MD	July 2012	7.6	%	$	1,837	$	(460	)	$	1,377	—		N/A		N/A		5,517	R	N/A	N/A
Mosaic II (ST Portfolio)	Houston, TX and Stamford, CT	November 2013	16.3	%	15,543		1,338			16,881		—		1,018,404	SF	24,987	SF	761	R	N/A	N/A
Apartment Buildings					$	17,380	$	878		$	18,258	$	—
Park Lane Hotel	Central Park South, Manhattan, NY	November 2013	5.2	%	23,104		(3,731		)	19,373		—		445,600	SF	—		628	H	N/A	N/A
Hotel Taiwana	St. Barthelemy, French West Indies	October 2011	17.0	%	7,942		(605		)	7,337		—		61,300	SF	4,300	SF	22	H	N/A	N/A
Coral Beach and Tennis Club	Coral Beach, Bermuda	December 2013	49.0	%	5,155		(2,132		)	3,023		—		52	Acres	—		87	H	N/A	N/A
Hotels					$	36,201	$	(6,468	)	$	29,733	$	—
The Plaza at Harmon Meadow	Secaucus, NJ	March 2015	49.0	%	$	5,591	$	47		$	5,638	—		—	—	217,613	SF	—	—	N/A	N /A
Commercial					$	5,591	$	47		$	5,638
Milanosesto Holdings (Sesto Holdings)	Milan, Italy	October 2010	7.2	%	$	5,037	$	—		$	5,037	—		322	Acres	TBD		TBD		2014	2024
Land Development					$	5,037	$	—		$	5,037	$	—
(1) This column only represents capital commitments required under the various joint venture agreements. However, many of the operating agreements provide for the operating partner to call capital. If a joint venture partner, such as New Valley, declines to fund the capital call, then the partner’s ownership percentage could either be diluted or, in some situations, the character of a funding member’s contribution would be converted from a capital contribution to a member loan.
(2) Percentage owned as of September 30, 2015 has been corrected from the Company's Report on Form 10-Q for the quarterly period ended June 30, 2015.
(3) Carrying value as of September 30, 2015, includes non-controlling interest of $975 and $2,405, respectively.
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 $1,979 as of September 30, 2015.

59

Liquidity and Capital Resources

Cash and cash equivalents decreased by $80,018 for the nine months endedSeptember 30, 2015 and increased by $145,950 for the nine months endedSeptember 30, 2014.

Cash provided from operations was $140,018 and $100,044 for the nine months endedSeptember 30, 2015 and 2014, respectively. The increase in cash provided from operations for the nine month ended September 30, 2015 was primarily due to the absence of a one-time payment in 2014 related to the the Engle progeny settlement. In October 2013, we entered into a settlement with approximately 4,900Engle progeny plaintiffs and their counsel. Liggett agreed to pay a total of approximately $110,000 under this settlement, which consisted of a $61,600 lump sum payment in 2014 and agreed to pay the balance in installments over 14 years, beginning in February 2015. The increase in cash provided from operations for the nine months ended September 30, 2015 was offset by higher income tax payments in 2015.

Cash used in investing activities was $62,082 and $195,807 for the nine months endedSeptember 30, 2015 and 2014, respectively. In the first nine months of 2015, cash used in investing activities was for the purchase of investment securities of $162,845, investment in real estate ventures of $43,280, investment in real estate held for sale of $12,512, purchase of long-term investments of $10,000, capital expenditures of $7,859, an increase in restricted assets of $6,872, issuance of notes receivable of $4,410 and an increase in cash surrender value of corporate-owned life insurance policies of $1,225. This was offset by the sale of investment securities of $161,029, distributions from investments in real estate ventures of $11,205, collections of notes receivable of $5,106, pay-downs of investment securities of $5,743, the maturity of investment securities of $2,653, proceeds from sale of preferred securities of $1,000, proceeds from the sale or liquidation of long-term investments of $182 and proceeds from the sale of fixed assets of $3. 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 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 investments in real estate ventures of $5,540, proceeds from the sale or liquidation of long-term investments of $549, collections of notes receivable of $933 and proceeds from the sale of fixed assets of $4.

Our investment philosophy is to maximize return on investments using a reasonable expectation for return. For example, we expect our investment returns to exceed the comparable return on cash or short-term U.S. Treasury Bills when investing in equity and debt securities and more than our weighted average cost of capital when investing in non-consolidated real estate businesses and capital expenditures. In accordance with this philosophy, our investing activities increased in 2014 and we will continue to monitor our investment philosophy in the future.

Cash used in financing activities was $157,954 for the nine months endedSeptember 30, 2015 compared to cash provided by financing activities of $241,713 for the nine months endedSeptember 30, 2014. In the first nine months of 2015, cash was used for the dividends and distributions on common stock of $139,430, net repayments of debt under the revolver of $15,964, repayments of debt of $4,968, payment of deferred financing costs of $624 and distributions to non-controlling interest of $564. This was offset by proceeds from issuance of debt of $1,519, proceeds from the exercise of Vector options of $1,321 and the tax benefit of options exercised of $756. In the first nine months of 2014, cash was provided by the proceeds from issuance of debt 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 dividends and 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 recent years, we have taken advantage of historically low interest rates and lowered our weighted average cost of capital by issuing debt at lower interest rates than our historical borrowing levels. We will continue to evaluate current market conditions related to our capital structure. For example, based on quoted market prices, our 7.75% Senior Secured Notes were yielding approximately 5.9% on a “yield to worst” basis, or approximately 4.5% more than the comparable U.S. Treasury Bond at September 30, 2015. The Company is able to redeem such bonds at price of 105.813% beginning on February 15, 2016. The redemption price declines to 103.875% on February 15, 2017, 101.938% on February 15, 2018 and 100% on February 15, 2019. We have no current intentions or plans to undertake any capital markets activities, and there can be no assurance that we would be able to issue debt at a lower interest rate than our historical borrowing levels in the future. In the event we pursue any capital markets activities, our ability to complete any offering would be subject to market conditions.

LiggettCredit Facility and Liggett Term Loan Under Credit Facility. As discussed in Recent Developments, Liggett and Maple entered into an amended and restated Credit Agreement on January 14, 2015, with Wells Fargo. The credit facility increased from $50,000 to $60,000 and expires on March 31, 2020. As of September 30, 2015, $5,171 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the Credit Facility was approximately $52,915 based on eligible collateral at September 30, 2015. At September 30, 2015, management believed that Liggett was in compliance with

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all covenants under the credit facility; Liggett's EBITDA, as defined, were approximately $215,195 for the last twelve months ended September 30, 2015.

Vector. On February 3, 2015, the holder of the 6.75% Variable Interest Senior Convertible Note due 2015, converted the remaining $25,000 principal balance of the $50,000 Note into 2,338,930 of our common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $25,000.

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 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, 2015	December 31, 2014
Covenant	Requirement
Consolidated EBITDA, as defined	$75,000	$270,033	$244,100
Leverage ratio, as defined	<3.0 to 1	1.56 to 1	1.23 to 1
Secured leverage ratio, as defined	<1.5 to 1	0.6 to 1	0.1 to 1

We and our subsidiaries have significant indebtedness and debt service obligations. At September 30, 2015, we and our subsidiaries had total outstanding indebtedness of $1,105,129. Approximately $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 $246,300, investment securities available for sale of approximately $288,400, long-term investments with an estimated value of approximately $58,600 and availability under Liggett's credit facility of approximately $52,900 at September 30, 2015. Management currently anticipates that these amounts, as well as expected cash flows from our operations, 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, 2015, approximately $5,200 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, 2015, 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 $52.

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In addition, as of September 30, 2015, $262,931 ($488,750 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 $2,692 with approximately $1,157 resulting from the embedded derivative associated with the 7.5% variable interest senior convertible notes, and the remaining $1,535 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 $9,900 per year.

We have estimated the fair market value of the embedded derivatives based principally on the results of a valuation model. The value of the embedded derivatives is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt, our stock price as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on our 7.5% Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by our stock price, convertible bond trading price, risk-free interest rates and stock volatility. The range of estimated fair market values of our embedded derivatives was between $150,125 and $148,769. We recorded the fair market value of our embedded derivatives at the approximate midpoint of the range at $149,739 as of September 30, 2015. 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, 2014. 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).

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

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

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

• governmental regulations and policies,

• effects of industry competition,

• 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, 2014 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

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q, the Company carried out an evaluation under the supervision of and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as of September 30, 2015, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2015, the Company’s disclosure controls and procedures were not effective because of the material weaknesses in internal control over financial reporting described in Part II, Item 9A of the 2014 Form 10-K. Management has concluded that the material weaknesses that were present at December 31, 2014 continued to exist as of September 30, 2015, as discussed below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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In 2014, management was required to include in its assessment of internal control over financial reporting the controls of Douglas Elliman Realty, LLC (“Douglas Elliman”), which became a consolidated subsidiary of the Company on December 13, 2013. In connection with management’s assessment of the Company’s internal control over financial reporting as of December 31, 2014, management identified control deficiencies that constituted material weaknesses in internal control over financial reporting at the Company's Douglas Elliman subsidiary as follows: 

i. The Company did not maintain effective monitoring of controls in certain areas relating to the period-end financial reporting process at Douglas Elliman. This material weakness contributed to additional material weaknesses related to the analysis and review of significant account reconciliations and the interim and annual financial statements, segregation of duties of finance and accounting personnel, processing and recording of recurring and non-recurring journal entries and supervision of access of rights and privileges of users of Douglas Elliman’s information technology system for finance and accounting as described below.

ii. The Company did not maintain effective controls over Douglas Elliman’s period-end financial reporting processes, including controls over the preparation, analysis and review of certain significant account reconciliations required to assess the appropriateness of account balances at period-end, as well as controls over the preparation and review of the interim and annual financial statements. This lack of controls over the preparation and review of interim and annual financial statements impacted the Company’s ability to identify and accumulate all information required to determine the completeness and accuracy of the financial statements and disclosures.

iii. The Company did not maintain effective controls over the segregation of duties of finance and accounting personnel at Douglas Elliman. Specifically, finance and accounting personnel at Douglas Elliman were authorized to perform interrelated functions that could have resulted in either erroneous or inappropriate actions that could have affected the Company’s financial statements.

iv. The Company did not maintain effective controls over the processing and recording of recurring and non-recurring journal entries at Douglas Elliman. Specifically, effective controls did not exist to ensure that journal entries were either prepared with sufficient documentation or were reviewed and approved to verify the accuracy and completeness of the journal entries.

v. The Company did not maintain effective controls over access to Douglas Elliman’s information technology system for finance and accounting (“IT System”). Specifically, access review controls to Douglas Elliman’s IT System were not effectively designed to restrict access to certain financial applications and data. This impacted controls over financial reporting at Douglas Elliman that depended on the effective operation of restricted access.

These material weaknesses did not result in any material misstatements to the financial statements in any accounting periods ending prior to January 1, 2015 or for the three and nine months ended September 30, 2015. However, these material

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weaknesses could result in misstatement of the aforementioned account balances or disclosures that would result in material misstatements to the annual or interim consolidated financial statements that would not be prevented or detected.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the Company’s consolidated interim unaudited financial statements were prepared in accordance with U.S. GAAP. Based on the performance of additional procedures by management designed to ensure the reliability of the Company’s financial reporting, the Company’s management believes that the consolidated interim unaudited financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented and that this Quarterly Report on Form 10-Q 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 periods covered by this report.

Remediation Plan

The Company’s management has engaged in and is continuing to engage in efforts to remediate the underlying causes of the material weaknesses described above. Specifically, the following steps have been taken by management of the Douglas Elliman subsidiary:

i. Hiring additional personnel, including a new Chief Financial Officer, in Douglas Elliman’s finance department and restructuring titles and duties in Douglas Elliman’ finance department.

ii. Adding or strengthening new controls to ameliorate the processing and review of transactions and segregation of duties. The new controls are being tested and testing will continue in the fourth quarter of 2015.

The Company’s management and the Board of Directors believe that these remediation efforts represent significant improvements in the Company’s control environment and in its controls over the financial reporting of Douglas Elliman. Additional controls may also be required over time. The identified material weaknesses in internal control will not be considered fully addressed until the internal controls over these areas have been in operation for a sufficient period of time for management to conclude that the material weaknesses have been fully remediated. Management continues to work on implementing and testing the new controls in order to make this final determination.

Changes in Internal Control Over Financial Reporting

As discussed above, during the quarter ended September 30, 2015, management continued to implement certain remediation measures to improve the Company’s internal controls over financial reporting and to remediate previously identified material weaknesses. However, there were no changes that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Furthermore, neither the design nor the operating effectiveness of additional changes in internal control over financial reporting has been evaluated in the Company’s remediation process.

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 for the year ended December 31, 2014.

Liggett faces intense competition in the domestic tobacco industry.

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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 in 2014 Philip Morris, RJ Reynolds and Lorillard Tobacco Company, then the three largest cigarette manufacturers, controlled approximately 84.9% of the United States cigarette market. 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 60.8% of the premium segment and 47.3% of the total domestic market during 2014. During 2014, all of Liggett’s sales were in the discount segment, and its share of the total domestic cigarette market was 3.4%. 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’ merger with Lorillard Tobacco Company, which consolidates 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. Further, as part of the merger, RJ Reynolds and Lorillard Tobacco Company divested four of their brands to Imperial Tobacco PLC, our largest competitor for the sale of deep discount cigarettes.

Liggett’s business is highly dependent on the discount cigarette segment.

Liggett depends more on sales in the discount cigarette segment of the market, relative to the full-price premium segment, than its major competitors. Since 2004, all of Liggett’s unit volume was generated in the discount segment. The discount segment is highly competitive, with consumers having less brand loyalty and placing greater emphasis on price. While Philip Morris ,RJ Reynolds, and Imperial compete with Liggett in the discount segment of the market, the strongest competition for market share has come from a group of smaller manufacturers and importers, most of which sell low quality, deep discount cigarettes. While Liggett’s share of the discount market was 11.8% in 2014,11.6% in 2013 and 12.1% in 2012, Management Science Associates’ data indicate that the discount market share of these other smaller manufacturers and importers was approximately 24.6% in 2014, 24.2% in 2013, and 22.2% in 2012. If pricing in the discount market continues to be impacted by these smaller manufacturers and importers, margins in Liggett’s only current market segment could be negatively affected, which in turn could negatively affect the value of our common stock.

Liggett’s market share is susceptible to decline.

For a number of years prior to 2000, Liggett suffered a substantial decline in market share. Liggett’s market share increased in 2014, after having declined in 2013 and 2012. Liggett's market share increased during each of the years between 2000 and 2011 (except for 2008, which was unchanged). This earlier market share erosion resulted in part from Liggett’s highly leveraged capital structure that existed until December 1998 and its limited ability to match other competitors’ wholesale and retail trade programs, obtain retail shelf space for its products and advertise its brands. These declines also resulted from adverse developments in the tobacco industry, intense competition and changes in consumer preferences which have continued up to the current time. According to Management Science Associates' data, Liggett's overall domestic market share during 2014 was 3.4% compared to 3.3% during 2013, and 3.5% during 2012. Liggett's share of the discount segment was 11.8% during 2014, 11.6% during 2013 and 12.1% during 2012. Liggett's overall market share increased by 0.1% in 2014 after declining by 0.2% in 2013. If it were to decline substantially in the future, Liggett's sales volume, operating income and cash flows would be materially adversely affected, which in turn would negatively affect the value of our common stock.

The domestic cigarette industry has experienced declining unit sales in recent periods.

Industry-wide shipments of cigarettes in the United States have been declining for a number of years, with Management Science Associates’ data indicating that domestic industry-wide shipments decreased by approximately 3.0% in 2014 as compared to 2013, and by approximately 4.7% in 2013 as compared to 2012. We believe that industry-wide shipments of cigarettes in the United States will continue to decline as a result of numerous factors. These factors include health considerations, diminishing social acceptance of smoking, and a wide variety of federal, state and local laws limiting smoking in restaurants, bars and other public places, as well as increases in federal and state excise taxes and settlement-related expenses which have contributed to high cigarette price levels in recent years . If this decline in industry-wide shipments continues and Liggett is unable to capture market share from its competitors, or if the industry as a whole is unable to offset the decline in unit sales with price increases, Liggett’s sales volume, operating income and cash flows could be materially adversely affected, which in turn could negatively affect the value of our common stock.

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The Family Smoking Prevention and Tobacco Control Act may adversely affect our sales and operating profit.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Manufacturers of products first introduced after February 15, 2007 and before March 22, 2011 who submitted a substantial equivalence report to FDA prior to March 23, 2011 may continue to market the tobacco product unless FDA issues an order that the product is not substantially equivalent. Failure to timely submit the report, or FDA’s conclusion that such a “new tobacco product” is not substantially equivalent, will cause the product to be deemed misbranded and/or adulterated. After March 22, 2011, a “new tobacco product” may not be marketed without an FDA substantial equivalence determination. Prior to the deadline, Liggett and Vector Tobacco submitted substantial equivalence reports to FDA for numerous products. It is possible that FDA could

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determine some, or all, of these products are not “substantially equivalent” to a preexisting tobacco product. Such a determination could prevent us from marketing these products in the United States and could have a material adverse effect on us.

Liggett and Vector Tobacco have begun to receive feedback from FDA regarding certain of their substantial equivalence reports, including “Preliminary Finding” letters and other FDA correspondence requesting additional information that would support FDA’s determinations of substantial equivalence. Liggett and Vector Tobacco have timely responded to FDA’s requests. Liggett and Vector Tobacco cannot predict whether FDA will deem these responses sufficient to support determinations of substantial equivalence for the products covered by these substantial equivalence reports.

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

Zoom is subject to risks relating to the industry in which it operates

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, obsolescence, and market acceptance of Zoom’s products. Zoom 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. Over the past year we have seen significant changes in the e-cigarette market with apparent declines in the sales of disposable and rechargeable e-cigarettes while open system vapor products that feature refillable tanks and low-cost flavored liquids have demonstrated mixed results. Given this backdrop, our primary focus on e-cigarettes is to stay prepared to pursue opportunities if they occur. Our exposure to Zoom, as of September 30, 2015, was approximately $2.0 million.

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, 2015 except for approximately 5,837,759 shares of our common stock issued as a stock dividend on September 29, 2015.

Issuer Purchases of Equity Securities

Our purchases of our common stock during the three months ended September 30, 2015 were as follows:

Period	Total Number of Shares Purchased		Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
						—	—
July 1 to July 31, 2015	—		—			—	—
August 1 to August 31, 2015	83,411	(1)	24.98		(1)	—	—
September 1 to September 30, 2015	—		—			—	—
Total	83,411		$	24.98		—	—

____________________________

⁽¹⁾  Delivery of shares to us in payment of tax wtihholding in connection with an employee's vesting in restricted stock. The shares were immediately canceled. The number of shares and average price paid per share have not been adjusted for the impact of our 5% stock dividend, payable on September 29, 2015.

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Item 6.    Exhibits

12.1	Computation of Ratio of Earnings to Fixed Charges for each of the five years within the period ended December 31, 2014 and for each of the nine months within the periods ended September 30, 2015 and 2014.
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

69

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:	November 9, 2015

70

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,
	2015		2014		2014		2013		2012		2011		2010
Earnings as defined:
Pre-tax income	94,321		57,272		82,487		63,487		53,717		123,157		85,570
Distributions from investees	3,465		3,404		5,152		4,251		19,169		9,322		12,212
Interest expense	77,645		121,335		146,787		147,084		132,538		93,939		72,572
Income in equity of affiliate	(1,278	)	(3,002	)	(4,103	)	(22,925	)	(29,764	)	(19,966	)	(23,963	)
Interest portion of rental expense (1)	5,962		5,558		7,505		2,174		1,367		1,438		1,223
Total earnings	180,115		184,567		237,828		194,071		177,027		207,890		147,614
Fixed charges as defined:
Interest expense	77,645		121,335		146,787		147,084		132,538		93,939		72,572
Interest portion of rent expense (1)	5,962		5,558		7,505		2,174		1,367		1,438		1,223
Total fixed charges	83,607		126,893		154,292		149,258		133,905		95,377		73,795
Ratio of earnings to fixed charges	2.15		1.45		1.54		1.30		1.32		2.18		2.00

________________________

(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: November 9, 2015

/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: November 9, 2015

/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, 2015 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.

November 9, 2015

/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, 2015 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.

November 9, 2015

/s/ J. Bryant Kirkland III

J. Bryant Kirkland III

Vice President, Treasurer and Chief Financial Officer

EX-99.1

Exhibit 99.1

I. INDIVIDUAL CASES

A. Engle Progeny Cases.

Pursuant to the Florida Supreme Court's 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 285 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, 2016.

Bristol v. R.J. Reynolds,et al., Case No. 15-010565-CA-01, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 05/11/15). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial in 07/16.

Cannon v. R.J. Reynolds,et al., Case No. 2007 CA 2774, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 11/19/07).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled as the back up trial starting 05/02/16 and the primary case scheduled for trial starting 06/27/16.

Durrance v. R.J. Reynolds,et al., Case No. 11-00026-GS, Circuit Court of the 10^th Judicial Circuit, Highlands County (case filed 01/12/11).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 05/23/16.

Ewing v. R.J. Reynolds,et al., Case No. 2009-CA-002791, Circuit Court of the 1^st Judicial Circuit, Escambia County (case filed 08/21/09).  One individual suing on behalf of the estate and survivors of a deceased smoker.   The case is scheduled for trial starting 01/11/16.

Forman v. R.J. Reynolds,et al., Case No. 07-046345-CA-01, Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 12/28/07). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 03/07/16.

Lawrence v. R.J. Reynolds,et al., Case No. 09-CA-000178, Circuit Court of the 5^th Judicial Circuit, Marion County (case filed 01/12/09). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 08/15/16.

Ledea v. R.J. Reynolds,et al., Case No. 07-041730-CA-01, 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 for trial starting 03/28/16.

Manassa v. R.J. Reynolds,et al., Case No. 15-008515, Circuit Court of the 11th Judicial Circuit, Miami Dade County (case filed 04/14/15).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial in 06/16.

Pijuan 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).  One individual suing.  The case is scheduled for trial starting 12/01/15. 

Shulman 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.  Trial commenced 10/16/15.

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(ii) Post-Trial Engle Progeny Cases.

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).  This was a personal injury action filed by a smoker and his spouse that proceeded to jury trial in October 2014.  At the close of plaintiff’s case, the court granted directed verdict to Liggett on all claims other than the claim for conspiracy to conceal.  In November 2014, the jury returned a verdict in favor of plaintiffs and awarded compensatory damages in the amount of $15,000,000.  The jury apportioned fault as follows:  Plaintiff - 15%, Philip Morris - 85%.  While the jury determined that Liggett’s participation in an agreement to conceal was a legal cause of injury to plaintiffs, the court refused to allow the jury to consider apportioning fault to Liggett.  The jury assessed punitive damages against Philip Morris for $19,700,000 and Liggett for $300,000.  Post-trial motions were denied.  In January 2015, a joint and several judgment was entered against the defendants for $12,750,000 for the compensatory damages and $300,000 in punitive damages was awarded against Liggett. The defendants filed a notice of appeal to the Second District Court of Appeal. In March 2015, plaintiffs' motion for attorneys' fees was denied by the court. Plaintiffs appealed that ruling. Briefing is underway on both appeals.

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% ($2,750,000). In April 2012, a joint and several judgment for $5,500,000 was entered against the defendants and the court refused to reduce the award by the Decedent's comparative fault. In July 2014, the First District Court of Appeal affirmed the lower court, but certified to the Florida Supreme Court the issue of the statute of repose, which was before that court in Hess. In August 2014, defendants filed a notice to invoke the discretionary jurisdiction of the Florida Supreme Court. In September 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal. As a result of the Florida Supreme Court's decision in Hess, in the third quarter of 2015, Liggett accrued $4,146,000 for this matter. The parties reached a confidential settlement agreement regarding the amount of plaintiff's trial level attorneys' fees and costs in the event plaintiff prevails on appeal.

Calloway v. R.J. Reynolds,et al., Case No. 08-21770, Circuit Court of the 17^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, after denying post-trial motions, the trial court reduced the compensatory award and entered a joint and several judgment for compensatory damages of $16,100,000 against 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. Oral argument occurred on June 16, 2015 and a decision is pending.

Caprio v. R.J. Reynolds,et al., Case No. 2007-CV-036719, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 12/28/07). This was a personal injury action that proceeded to jury trial in February 2015. At trial, the court directed verdict in Liggett’s favor on all of plaintiff’s claims other than conspiracy. The jury returned a partial verdict in favor of plaintiff and against Philip Morris, R.J. Reynolds, Lorillard and Liggett and awarded economic damages in the amount of $559,172. In May 2015, over defendants' objections, the court entered a partial verdict on class membership, product use causation, and economic damages and ordered a new trial on the remaining issues, including comparative fault and punitive damages. Defendants' post-trial motions were denied. Defendants appealed to the  Fourth District Court of 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 and the defendants filed a notice of cross appeal. Briefing is underway.

2

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).  This was a wrongful death action that proceeded to jury trial in July 2014. In August 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%, R.J. Reynolds - 14.5%, Lorillard - 14.5% and Liggett - 1% ($31,234). In January 2015, the court granted defendants' motion for a new trial. Plaintiff filed a notice of appeal to the Fourth District Court of Appeal. Briefing is underway.

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).  This was a wrongful death action that proceeded to jury trial in September 2014.  Liggett was the only defendant at trial. In October 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%. Because Liggett was found liable for an intentional tort, the court refused to reduce the compensatory award by the decedent's comparative fault and final judgment was entered against Liggett for $13,100,000. In February 2015, Liggett filed a notice of appeal to the Second District Court of Appeal. Briefing is underway.The parties reached a confidential settlement agreement regarding the amount of plaintiff's trial level attorneys' fees and costs in the event plaintiff prevails on appeal.

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%, R.J. Reynolds - 30%, Liggett - 20% ($3,008,138) and Philip Morris - 15%. No punitive damages were awarded against Liggett. Defendants appealed the final judgment. The Fourth District Court of Appeal held that the trial court erred in entering summary judgment against defendants on their statute of repose defense and in not reducing the compensatory damages award as excessive.  Both parties filed notices to invoke the discretionary jurisdiction of the Florida Supreme Court. In September 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal. Plaintiff moved for an award of attorneys' fees against Liggett pursuant to the fee shifting provisions of Florida's proposal for settlement statute based on a settlement offer that was not accepted by Liggett.  The court granted the attorneys' fee motion with the amount to be determined in a future 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 merits judgment in October 2014 and other than an issue regarding the calculation of interest on the judgment and Liggett's share of plaintiff'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). No punitive damages were awarded against Liggett. A joint and several judgment was entered against the defendants for $487,000. In September 2013, the First District Court of Appeal affirmed. Liggett satisfied the merits judgment in January 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.  In June 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.

3

B. Other Individual Cases.

Florida

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. Defendants moved to dismiss the case.

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. Defendants moved to dismiss the case.

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. The smoker was diagnosed with lung cancer in 2003, and in 2005, he and his wife sued Philip Morris.  The smoker died in 2006.  In January 2008, plaintiff served her Motion to Amend the Complaint to assert a claim for wrongful death, allege Engle claims and to add defendants not previously sued, including Liggett and Vector.  The amended complaint asserts both Engle and non-Engle claims.  Liggett and Vector answered the amended complaint and asserted various defenses, including that all of plaintiff’s claims are time barred.

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. Defendants moved to dismiss the case.

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. Defendants moved to dismiss the case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

Gentile v. R.J. Reynolds,et al., Case No. 50215CA-005405XXXXMB, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 05/26/15). One individual suing on behalf of the estate and survivors of a deceased smoker.

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. Defendants moved to dismiss the case.

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 is named as a defendant. In October 2008, defendants moved to dismiss the case. A hearing has not been scheduled.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

Laschke,et al.v. R.J. Reynolds,et al., Case No. 96-8131-CI-008, Circuit Court of the 6^th Judicial Circuit, Pinellas County (case filed 12/20/96). Two individuals suing. The dismissal of the case was reversed on appeal, and the case was remanded to the trial court. An amended complaint was filed by the plaintiffs. In January 2006, defendants moved 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. There has been no recent activity in this case.

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

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. Defendants moved to dismiss the case.

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. There has been no recent activity in this case.

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. Defendants moved to dismiss the case.

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. Defendants moved to dismiss the case.

Spivak v. Philip Morris Inc.,et al., Case No. 08-19309 (AH), Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 06/26/08).  One individual suing on behalf of the estate and survivors of a deceased smoker. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

5

Williams v. Philip Morris USA Inc., et al., Case No. 06-CA-007430, Circuit Court of the 13^th Judicial Circuit, Hillsborough County (case filed 08/22/06).  One individual suing on behalf of the estate and survivors of a deceased smoker.Defendants moved to dismiss the case.

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. Defendants moved to dismiss the case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

Maryland

Bearman,et al. v. Union Carbide Corporation,et al., Case No. 24-X-14-000303, Circuit Court, Baltimore City (case filed 07/13/15).  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, including Liggett.

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 the decedent. 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. In January 2014, defendants moved to dismiss the complaint. The motion is pending.

Culotta 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.

Danna v. Union Carbide Corporation,et al., Case No. 24-X-15-000155, Circuit Court, Baltimore City (case filed 08/19/15). One individual suing. Plaintiff seeks damages allegedly caused by his exposure to asbestos and cigarette smoke, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants.

Fales 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. 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.

Lively v. Union Carbide Corporation,et al., Case No. 24-X-13-000710, Circuit Court, Baltimore City (case filed 03/20/15). 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, including Liggett andVector Tobacco. In April 2015, defendants moved to dismiss the complaint. The motion is pending.

6

Ruth v. Union Carbide Corporation,et al., Case No. 24-X-13-000717, Circuit Court, Baltimore City (case filed 08/07/15). One individual suing. Plaintiff seeks damages allegedly caused by his exposure to asbestos, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants, including Liggett.

Sapp,et al. v. Union Carbide Corporation,et al., Case No. 24-X-14-000310, Circuit Court, Baltimore City (case filed 07/13/15).  Four individuals suing.  Plaintiffs seek damages allegedly caused by exposure to asbestos and cigarettes, with claims against certain asbestos manufacturer defendants and certain tobacco company defendants, including Liggett.

Schwartz v. Union Carbide Corporation,et al., Case No. 24-X-15-000074, Circuit Court, Baltimore City (case filed 05/22/15). 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, including Liggett. In June 2015, 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 filed 05/16/14). Two individuals suing. Plaintiffs are the surviving children of the decedent. 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. 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 his 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.

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. A status conference is scheduled for June 24, 2016.

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. There has been no recent activity in this case.

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 remaining defendant. In July 2013, the court granted plaintiffs' motion to restore the case to the active docket calendar. Liggett appealed, and the intermediate appellate court affirmed the lower court's decision. A status conference is scheduled for November 13, 2015.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

7

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

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. There has been no recent activity in this case.

II.CLASS ACTION CASES

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 of certain "common" 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. The issue of damages was reserved for further proceedings. The court entered judgment in October 2013, dismissing all claims except the ventilated filter claim. The judgment was affirmed on appeal and remanded to the trial court for further proceedings. In April 2015, the plaintiffs filed a petition for writ of certiorari to the United States Supreme Court which subsequently declined review. In July 2015, the trial court ruled on the scope of the ventilated filter claim and determined that only 30 plaintiffs have potentially viable claims against the non-Liggett defendants, which may be pursued in a second phase of the trial. The court intends to try the claims of these plaintiffs in six consolidated trials, each with five plaintiffs. The trial court set the first two dates for the consolidated trials for June 13, 2016 and December 4, 2016. With respect to Liggett, the trial court requested that Liggett and plaintiffs brief whether any claims against Liggett survive given the outcome of the first phase of the trial.  Briefing of that issue is underway. If the case proceeds against Liggett, it is estimated that Liggett could be a defendant in less than 25 of the remaining individual cases.

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 purported 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 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

8

exposure. The plaintiffs seek an unspecified amount of compensatory and punitive damages. No class certification hearing has been held. In 2013, plaintiffs filed a motion to stay the case and that motion was granted.  

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 (Net Income (Loss) for Purposes of Determining Basic and Diluted EPS) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Net income attributed to Vector Group Ltd.	$ 12,205	$ 14,879	$ 51,029	$ 25,384
Expense attributed to participating securities	(360)	(423)	(1,510)	(739)
Net income attributed to Vector Group Ltd. available to common stockholders	$ 11,845	$ 14,456	$ 49,519	$ 24,645

XML

Notes Payable, Long-Term Debt and Other Obligations Non Cash Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Amortization of debt discount, net	$ 6,868	$ 14,277	$ 18,708	$ 41,180
Amortization of deferred finance costs	1,085	1,147	3,073	2,910
Non-cash Interest Expense	7,953	16,418	21,781	49,202
Convertible Debt [Member] | 6.75% Variable Interest Senior Convertible Note due 2014 - Vector
Debt Instrument [Line Items]
Acceleration of interest expense	0	0	0	3,679
Convertible Debt [Member] | 6.75% Variable Interest Senior Convertible Exchange Notes
Debt Instrument [Line Items]
Acceleration of interest expense	$ 0	$ 994	$ 0	$ 1,433

XML

Long-Term Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments at cost	$ 53,648		$ 53,648		$ 40,292
Long-term investments	53,648		53,648		40,292
Equity income (loss) from real estate ventures	$ (916)	$ 3,258	$ 1,278	$ 3,002
Boyar Value Fund [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ownership percentage	30.00%		30.00%
Investment partnership accounted for under the equity method	$ 6,984		$ 6,984
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments at cost	42,056		42,056		32,239
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	47,022		47,022		39,147
Real estate partnership | Carrying Value | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments at cost	515		515		698
Real estate partnership | Fair Value | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	587		587		1,108
Investment partnerships
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments at cost	42,056		42,056		32,239
Investment partnership accounted for under the equity method	11,592		11,592		8,053
Equity income (loss) from real estate ventures	(579)	$ 829	(2,273)	$ 1,462
Investment partnerships | Carrying Value | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments at cost	41,541		41,541		31,541
Investment partnerships | Fair Value | Fair Value, Measurements, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost method investments, fair value disclosure	$ 46,435		$ 46,435		$ 38,039

XML

Notes Payable, Long-Term Debt and Other Obligations Fair Value of Notes Payable and Long Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 1,285,711	$ 1,313,711
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 887,647	$ 913,351

XML

Investment Securities Available for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 244,468	$ 254,837
Gross Unrealized Gains	45,079	94,885
Gross Unrealized Losses	(1,171)	(3,679)
Fair Value	288,376	346,043
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Cost	63,524	63,041
Gross Unrealized Gains	44,623	92,255
Gross Unrealized Losses	(1,171)	(1,104)
Fair Value	106,976	154,192
Mutual funds invested in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Cost	54,864	61,485
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(1,659)
Fair Value	54,864	59,826
Marketable debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost	126,080	130,311
Gross Unrealized Gains	456	2,630
Gross Unrealized Losses	0	(916)
Fair Value	$ 126,536	$ 132,025

XML

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2015

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,
	2015		2014			2015		2014
Income before provision for income taxes	$	29,357	$	31,669		$	94,321	$	57,272
Income tax expense using estimated annual effective income tax rate	11,557		9,932			37,238		17,962
Changes in effective tax rates	1,539		(374		)	—		—
Impact of discrete items, net	412		1,305			313		1,944
Inclusion of tax liabilities from unincorporated entities	—		1,101			—		1,101
Income tax expense	$	13,508	$	11,964		$	37,551	$	21,007

XML

Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost — benefits earned during the period	$ 133	$ 131	$ 398	$ 392
Interest cost on projected benefit obligation	1,205	1,549	3,803	4,647
Expected return on assets	(1,814)	(2,130)	(5,627)	(6,389)
Settlement loss	0	0	1,607	0
Amortization of net loss (gain)	254	269	823	806
Net (income) expense	(222)	(181)	1,004	(544)
Other Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost — benefits earned during the period	2	2	6	7
Interest cost on projected benefit obligation	93	108	278	323
Expected return on assets	0	0	0	0
Settlement loss	0	0	0	0
Amortization of net loss (gain)	(24)	(15)	(73)	(45)
Net (income) expense	$ 71	$ 95	$ 211	$ 285

XML

Inventories (Tables)

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories consist of:

	September 30, 2015			December 31, 2014
Leaf tobacco	$	50,672		$	49,948
Other raw materials	4,184			3,532
Work-in-process	624			879
Finished goods	66,266			62,876
E-Cigarettes	106			3,079
Inventories at current cost	121,852			120,314
LIFO adjustments	(31,157		)	(29,991		)
	$	90,695		$	90,323

XML

New Valley LLC Schedule of Real estate held for sale, net (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investment Holdings [Line Items]
Real estate held for sale, net	$ 22,963	$ 10,643
New Valley LLC [Member]
Investment Holdings [Line Items]
Real estate held for sale, net	22,963	10,643
New Valley LLC [Member] | Sagaponack [Member]
Investment Holdings [Line Items]
Real estate held for sale, net	12,512	0
New Valley LLC [Member] | Escena, net
Investment Holdings [Line Items]
Real estate held for sale, net	$ 10,451	$ 10,643

XML

Summary of Significant Accounting Policies (Schedule of Other Income (Loss), Net) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
(Loss) gain on warrants	$ (1,282)	$ 991	$ (1,765)	$ 868
Interest and dividend income	1,578	1,476	5,185	3,665
Accretion of interest income from debt discount on notes receivable	5	11	79	87
Provision for loss on real estate held for sale	137	0	361	0
Out-of-period adjustment	0	0	0	1,231
Acceleration of closing fee related to termination of Douglas Elliman joint venture	0	0	0	2,335
Provision for loss on real estate held for sale	(229)	0	(229)	0
Loss on sale of assets	(75)	0	(75)	0
Other expense	(1)	(12)	(2)	(19)
Other income, net	$ 133	$ 2,466	$ 3,554	$ 8,167

XML

Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands		9 Months Ended
	Sep. 04, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 26, 2014
Summary of Investment Holdings [Line Items]
Stock dividend paid to company stockholders				5.00%
Fair market value of embedded derivatives at the midpoint of the inputs		$ 149,739	$ 169,386
Cancellation of treasury shares	$ 12,857	0
Cancellation of treasury shares (in shares)	4,145,247
Minimum [Member]
Summary of Investment Holdings [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs		148,769	167,593
Maximum [Member]
Summary of Investment Holdings [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs		$ 150,125	$ 171,215

XML

Notes Payable, Long-Term Debt and Other Obligations (Details) - USD ($)		9 Months Ended	12 Months Ended
	Feb. 03, 2015	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 887,647,000	$ 913,351,000
Less: Current maturities		(7,957,000)	(52,640,000)
Amount due after one year		879,690,000	860,711,000
Fair value of the derivatives embedded		149,739,000	168,502,000
6.75% Variable Interest Senior Convertible Note due 2015
Debt Instrument [Line Items]
Fair value of the derivatives embedded		0	884,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $136,365 and $146,634
Debt Instrument [Line Items]
Fair value of the derivatives embedded		75,788,000	87,638,000
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $89,454 and $98,831
Debt Instrument [Line Items]
Fair value of the derivatives embedded		73,951,000	80,864,000
Secured Debt | 7.75% Senior Secured Notes due 2021, including premium of $8,337 and $9,275
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 608,337,000	609,275,000
Interest rate		7.75%
Convertible Debt
Debt Instrument [Line Items]
Conversion basis amount		$ 1,000
Convertible Debt | 7.75% Senior Secured Notes due 2021, including premium of $8,337 and $9,275
Debt Instrument [Line Items]
Premium		8,337,000	9,275,000
Convertible Debt | 6.75% Variable Interest Senior Convertible Note due 2015
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 0	$ 25,000,000
Interest rate	6.75%	6.75%
Converted amount	$ 25,000,000
Convertible principal balance	$ 50,000,000
Note conversion (in shares)	2,338,930	0	93.5572
Increase in equity from conversion	$ 25,000,000
Convertible Debt | 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $136,365 and $146,634
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 93,635,000	$ 83,366,000
Interest rate		7.50%
Unamortized discount		$ 136,365,000	146,634,000
Convertible Debt | 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $89,454 and $98,831
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 169,296,000	159,919,000
Interest rate		5.50%
Unamortized discount		$ 89,454,000	$ 98,831,000
Note conversion (in shares)		40.5891	40.5891
Line of Credit | Revolving credit facility | Liggett [Member]
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 1,803,000	$ 17,767,000
Line of Credit | Term loan under credit facility | Liggett [Member]
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		3,368,000	3,589,000
Line of Credit | Revolving Credit and Term Loan Facility | Liggett [Member]
Debt Instrument [Line Items]
Amount outstanding		5,171,000
Remaining borrowing capacity		52,915,000
Equipment loans | Liggett [Member]
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		10,919,000	13,966,000
Other
Debt Instrument [Line Items]
Total notes payable, long-term debt and other obligations		$ 289,000	$ 469,000

XML

Condensed Consolidating Financial Information Statements of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	$ 140,018	$ 100,044
Cash flows from investing activities:
Sale of investment securities	161,029	173,046
Maturities of investment securities	2,653	517
Purchase of investment securities	(162,845)	(312,919)
Proceeds from sale or liquidation of long-term investments	182	549
Purchase of long-term investments	(10,000)	(12,000)
Investments in real estate ventures	(43,280)	(29,378)
Purchase of subsidiaries	0	(250)
Distributions from investments in real estate ventures	11,205	5,540
Increase in cash surrender value of life insurance policies	(1,225)	(435)
Increase in restricted assets	(6,872)	(1,108)
Issuance of notes receivable	(4,410)	(250)
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	3	4
Capital expenditures	(7,859)	(20,746)
Repayments of notes receivable	5,106	933
Pay downs of investment securities	5,743	690
Proceeds from sale of preferred securities	1,000	0
Investments in real estate held for sale	(12,512)	0
Net cash used in investing activities	(62,082)	(195,807)
Cash flows from financing activities:
Proceeds from issuance of debt	1,519	413,918
Deferred financing costs	(624)	(12,360)
Repayments of debt	(4,968)	(10,305)
Borrowings under revolver	130,691	645,894
Repayments on revolver	(146,655)	(673,866)
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(139,430)	(122,051)
Distributions to non-controlling interest	(564)	(4,861)
Proceeds from exercise of Vector options	1,321	4,407
Tax benefit of options exercised	756	937
Net cash (used in) provided by financing activities	(157,954)	241,713
Net (decrease) increase in cash and cash equivalents	(80,018)	145,950
Cash and cash equivalents, beginning of period	326,365	234,466
Cash and cash equivalents, end of period	246,347	380,416
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	84,832	23,189
Cash flows from investing activities:
Sale of investment securities	146,614	173,046
Maturities of investment securities	2,653	517
Purchase of investment securities	(156,521)	(310,934)
Proceeds from sale or liquidation of long-term investments	0	500
Purchase of long-term investments	(10,000)	(12,000)
Investments in real estate ventures	0	0
Purchase of subsidiaries		0
Distributions from investments in real estate ventures	0	0
Increase in cash surrender value of life insurance policies	(766)	0
Increase in restricted assets	(2)	188
Issuance of notes receivable	0	(35,000)
Investments in subsidiaries	(53,511)	(49,834)
Proceeds from sale of fixed assets	0	0
Capital expenditures	0	(11)
Repayments of notes receivable	1,106	35,933
Pay downs of investment securities	5,743	690
Proceeds from sale of preferred securities	0
Investments in real estate held for sale	0
Net cash used in investing activities	(64,684)	(196,905)
Cash flows from financing activities:
Proceeds from issuance of debt	0	408,750
Deferred financing costs	0	(12,360)
Repayments of debt	0	0
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(139,430)	(122,051)
Distributions to non-controlling interest	0	0
Proceeds from exercise of Vector options	1,321	4,407
Tax benefit of options exercised	756	937
Net cash (used in) provided by financing activities	(137,353)	279,683
Net (decrease) increase in cash and cash equivalents	(117,205)	105,967
Cash and cash equivalents, beginning of period	211,751	151,342
Cash and cash equivalents, end of period	94,546	257,309
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	168,095	98,319
Cash flows from investing activities:
Sale of investment securities	14,415	0
Maturities of investment securities	0	0
Purchase of investment securities	(6,324)	(1,985)
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
Distributions from investments in real estate ventures	0	0
Increase in cash surrender value of life insurance policies	(459)	(435)
Increase in restricted assets	(6,870)	(607)
Issuance of notes receivable	0	0
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	3	4
Capital expenditures	(3,305)	(15,121)
Repayments of notes receivable	0	0
Pay downs of investment securities	0	0
Proceeds from sale of preferred securities	0
Investments in real estate held for sale	0
Net cash used in investing activities	(2,540)	(18,144)
Cash flows from financing activities:
Proceeds from issuance of debt	1,519	40,168
Deferred financing costs	(624)	0
Repayments of debt	(4,786)	(41,485)
Borrowings under revolver	130,691	645,894
Repayments on revolver	(146,655)	(673,866)
Capital contributions received	5,633	10,800
Intercompany dividends paid	(134,215)	(54,000)
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	0	0
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash (used in) provided by financing activities	(148,437)	(72,489)
Net (decrease) increase in cash and cash equivalents	17,118	7,686
Cash and cash equivalents, beginning of period	9,724	11,812
Cash and cash equivalents, end of period	26,842	19,498
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	31,660	53,475
Cash flows from investing activities:
Sale of investment securities	0	0
Maturities of investment securities	0	0
Purchase of investment securities	0	0
Proceeds from sale or liquidation of long-term investments	182	49
Purchase of long-term investments	0	0
Investments in real estate ventures	(43,280)	(29,378)
Purchase of subsidiaries		(250)
Distributions from investments in real estate ventures	11,205	5,540
Increase in cash surrender value of life insurance policies	0	0
Increase in restricted assets	0	(689)
Issuance of notes receivable	(4,410)	(250)
Investments in subsidiaries	0	0
Proceeds from sale of fixed assets	0	0
Capital expenditures	(4,554)	(5,614)
Repayments of notes receivable	4,000	0
Pay downs of investment securities	0	0
Proceeds from sale of preferred securities	1,000
Investments in real estate held for sale	(12,512)
Net cash used in investing activities	(48,369)	(30,592)
Cash flows from financing activities:
Proceeds from issuance of debt	0	0
Deferred financing costs	0	0
Repayments of debt	(182)	(3,820)
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	47,878	39,034
Intercompany dividends paid	(10,354)	(20,939)
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	(564)	(4,861)
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash (used in) provided by financing activities	36,778	9,414
Net (decrease) increase in cash and cash equivalents	20,069	32,297
Cash and cash equivalents, beginning of period	104,890	71,312
Cash and cash equivalents, end of period	124,959	103,609
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	(144,569)	(74,939)
Cash flows from investing activities:
Sale of investment securities	0	0
Maturities 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
Distributions from investments in real estate ventures	0	0
Increase in cash surrender value of life insurance policies	0	0
Increase in restricted assets	0	0
Issuance of notes receivable	0	35,000
Investments in subsidiaries	53,511	49,834
Proceeds from sale of fixed assets	0	0
Capital expenditures	0	0
Repayments of notes receivable	0	(35,000)
Pay downs of investment securities	0	0
Proceeds from sale of preferred securities	0
Investments in real estate held for sale	0
Net cash used in investing activities	53,511	49,834
Cash flows from financing activities:
Proceeds from issuance of debt	0	(35,000)
Deferred financing costs	0	0
Repayments of debt	0	35,000
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	(53,511)	(49,834)
Intercompany dividends paid	144,569	74,939
Dividends and distributions on common stock	0	0
Distributions to non-controlling interest	0	0
Proceeds from exercise of Vector options	0	0
Tax benefit of options exercised	0	0
Net cash (used in) provided by financing activities	91,058	25,105
Net (decrease) increase 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

XML

Investments and Fair Value Measurements (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Nov. 04, 2011
Assets:
Investment securities available for sale	$ 288,376,000		$ 346,043,000
Liabilities:
Nonrecurring nonfinancial assets subject to fair value measurements	$ 0		0
5.5% Variable Interest Senior Convertible Notes due 2020 | Convertible Debt [Member]
Liabilities:
Interest rate	5.50%
Equity securities
Assets:
Investment securities available for sale	$ 106,976,000		154,192,000
Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	54,864,000		59,826,000
U.S. Government securities
Assets:
Investment securities available for sale	35,433,000
Corporate securities
Assets:
Investment securities available for sale	54,741,000
U.S. mortgage-backed securities
Assets:
Investment securities available for sale	6,351,000
Commercial mortgage-backed securities
Assets:
Investment securities available for sale	14,537,000
U.S. asset backed securities
Assets:
Investment securities available for sale	13,360,000
Fixed income securities
Assets:
Investment securities available for sale	126,536,000
Warrants (1) | Ladenburg Thalmann Financial Services [Member] | New Valley LLC [Member]
Liabilities:
Investment (in shares)				1,000,000
Investment	577,000		2,342,000
Change in fair value gain (loss)	(1,765,000)	$ 868,000	584,000
Fair Value, Measurements, Recurring | Total
Assets:
Money market funds	101,960,000		205,180,000
Certificates of deposit	3,465,000		3,462,000
Bonds	12,368,000		4,868,000
Warrants	577,000		2,342,000
Total	406,746,000		561,895,000
Liabilities:
Fair value of derivatives embedded within convertible debt	149,739,000		169,386,000
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Money market funds	101,960,000		205,180,000
Certificates of deposit	0		0
Bonds	12,368,000		4,868,000
Warrants	0		0
Total	276,168,000		430,937,000
Liabilities:
Fair value of derivatives embedded within convertible debt	0		0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Assets:
Money market funds	0		0
Certificates of deposit	3,465,000		3,462,000
Bonds	0		0
Warrants	0		0
Total	130,001,000		128,616,000
Liabilities:
Fair value of derivatives embedded within convertible debt	0		0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	0		0
Certificates of deposit	0		0
Bonds	0		0
Warrants	577,000		2,342,000
Total	577,000		2,342,000
Liabilities:
Fair value of derivatives embedded within convertible debt	149,739,000		169,386,000
Fair Value, Measurements, Recurring | Equity securities | Total
Assets:
Investment securities available for sale	106,976,000		154,192,000
Fair Value, Measurements, Recurring | Equity securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	106,976,000		153,666,000
Fair Value, Measurements, Recurring | Equity securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	0		526,000
Fair Value, Measurements, Recurring | Equity securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Mutual funds invested in fixed income securities | Total
Assets:
Investment securities available for sale	54,864,000		59,826,000
Fair Value, Measurements, Recurring | Mutual funds invested in fixed income securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	54,864,000		59,826,000
Fair Value, Measurements, Recurring | Mutual funds invested in fixed income securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Mutual funds invested in fixed income securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. Government securities | Total
Assets:
Investment securities available for sale	35,433,000		35,446,000
Fair Value, Measurements, Recurring | U.S. Government securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. Government securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	35,433,000		35,446,000
Fair Value, Measurements, Recurring | U.S. Government securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Corporate securities | Total
Assets:
Investment securities available for sale	54,741,000		56,248,000
Fair Value, Measurements, Recurring | Corporate securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		7,397,000
Fair Value, Measurements, Recurring | Corporate securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	54,741,000		48,851,000
Fair Value, Measurements, Recurring | Corporate securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. mortgage-backed securities | Total
Assets:
Investment securities available for sale	6,351,000		4,770,000
Fair Value, Measurements, Recurring | U.S. mortgage-backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. mortgage-backed securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	6,351,000		4,770,000
Fair Value, Measurements, Recurring | U.S. mortgage-backed securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | Total
Assets:
Investment securities available for sale	14,537,000		16,508,000
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	14,537,000		16,508,000
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. asset backed securities | Total
Assets:
Investment securities available for sale	13,360,000		16,955,000
Fair Value, Measurements, Recurring | U.S. asset backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | U.S. asset backed securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	13,360,000		16,955,000
Fair Value, Measurements, Recurring | U.S. asset backed securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Index-linked U.S. bonds | Total
Assets:
Investment securities available for sale	2,114,000		2,098,000
Fair Value, Measurements, Recurring | Index-linked U.S. bonds | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Index-linked U.S. bonds | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	2,114,000		2,098,000
Fair Value, Measurements, Recurring | Index-linked U.S. bonds | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0		0
Fair Value, Measurements, Recurring | Fixed income securities | Total
Assets:
Investment securities available for sale	126,536,000		132,025,000
Fair Value, Measurements, Recurring | Fixed income securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	0		7,397,000
Fair Value, Measurements, Recurring | Fixed income securities | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	126,536,000		124,628,000
Fair Value, Measurements, Recurring | Fixed income securities | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	$ 0		$ 0

XML

Investment Securities Available for Sale (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Market Value	$ 288,376		$ 288,376		$ 346,043
In loss position for Less than 12 months, Fair Value	9,159		9,159		151,724
In loss position for Less than 12 months, Unrealized Losses	(1,171)		(1,171)		(2,150)
In loss position for 12 months or more, Fair Value	0		0		15,934
In loss position for 12 months or more, Unrealized Losses	0		0		(1,529)
Total Fair Value	9,159		9,159		167,658
Total Unrealized Losses	1,171		1,171		3,679
Gross realized gains on sales	129	$ 100	13,601	$ 151
Gross realized losses on other-than-temporary impairments	(950)	(67)	(1,583)	(189)
Total net	(821)	33	12,018	(38)
Proceeds from investment securities sales	42,768	124,342	161,029	173,046
Proceeds from early redemptions by issuers	3,130	615	8,397	1,207
Gross realized losses on other-than-temporary impairments	(12,211)	$ 0	(12,211)	$ 0
Chief Executive Officer [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross realized losses on other-than-temporary impairments			(6,895)
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	106,976		106,976		154,192
In loss position for Less than 12 months, Fair Value	9,159		9,159		6,599
In loss position for Less than 12 months, Unrealized Losses	(1,171)		(1,171)		(138)
In loss position for 12 months or more, Fair Value	0		0		3,534
In loss position for 12 months or more, Unrealized Losses	0		0		(966)
Total Fair Value	9,159		9,159		10,133
Total Unrealized Losses	1,171		1,171		1,104
Mutual funds invested in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	54,864		54,864		59,826
In loss position for Less than 12 months, Fair Value					59,826
In loss position for Less than 12 months, Unrealized Losses					(1,659)
In loss position for 12 months or more, Fair Value					0
In loss position for 12 months or more, Unrealized Losses					0
Total Fair Value					59,826
Total Unrealized Losses					1,659
U.S. Government securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	0		0
1 Year up to 5 Years	35,433		35,433
More than 5 Years	0		0
Market Value	35,433		35,433
In loss position for Less than 12 months, Fair Value					22,375
In loss position for Less than 12 months, Unrealized Losses					(18)
In loss position for 12 months or more, Fair Value					0
In loss position for 12 months or more, Unrealized Losses					0
Total Fair Value					22,375
Total Unrealized Losses					18
Corporate securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	6,917		6,917
1 Year up to 5 Years	47,565		47,565
More than 5 Years	259		259
Market Value	54,741		54,741
In loss position for Less than 12 months, Fair Value					30,896
In loss position for Less than 12 months, Unrealized Losses					(204)
In loss position for 12 months or more, Fair Value					7,224
In loss position for 12 months or more, Unrealized Losses					(131)
Total Fair Value					38,120
Total Unrealized Losses					335
U.S. mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	1,061		1,061
1 Year up to 5 Years	5,132		5,132
More than 5 Years	158		158
Market Value	6,351		6,351
In loss position for Less than 12 months, Fair Value					3,370
In loss position for Less than 12 months, Unrealized Losses					(26)
In loss position for 12 months or more, Fair Value					0
In loss position for 12 months or more, Unrealized Losses					0
Total Fair Value					3,370
Total Unrealized Losses					26
Commercial mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	6,632		6,632
1 Year up to 5 Years	1,793		1,793
More than 5 Years	6,112		6,112
Market Value	14,537		14,537
In loss position for Less than 12 months, Fair Value					11,332
In loss position for Less than 12 months, Unrealized Losses					(46)
In loss position for 12 months or more, Fair Value					5,176
In loss position for 12 months or more, Unrealized Losses					(432)
Total Fair Value					16,508
Total Unrealized Losses					478
U.S. asset backed securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	2,342		2,342
1 Year up to 5 Years	10,343		10,343
More than 5 Years	675		675
Market Value	13,360		13,360
In loss position for Less than 12 months, Fair Value					15,228
In loss position for Less than 12 months, Unrealized Losses					(29)
In loss position for 12 months or more, Fair Value					0
In loss position for 12 months or more, Unrealized Losses					0
Total Fair Value					15,228
Total Unrealized Losses					29
Index-linked U.S. bonds
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	0		0
1 Year up to 5 Years	2,114		2,114
More than 5 Years	0		0
Market Value	2,114		2,114
In loss position for Less than 12 months, Fair Value					2,098
In loss position for Less than 12 months, Unrealized Losses					(30)
In loss position for 12 months or more, Fair Value					0
In loss position for 12 months or more, Unrealized Losses					0
Total Fair Value					2,098
Total Unrealized Losses					$ 30
Marketable debt securities
Schedule of Available-for-sale Securities [Line Items]
Under 1 Year	16,952		16,952
1 Year up to 5 Years	102,380		102,380
More than 5 Years	7,204		7,204
Market Value	$ 126,536		$ 126,536

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Cash Flows [Abstract]
Net cash provided by operating activities	$ 140,018	$ 100,044
Cash flows from investing activities:
Sale of investment securities	161,029	173,046
Maturities of investment securities	2,653	517
Purchase of investment securities	(162,845)	(312,919)
Proceeds from sale or liquidation of long-term investments	182	549
Purchase of long-term investments	(10,000)	(12,000)
Investments in real estate ventures	(43,280)	(29,378)
Distributions from investments in real estate ventures	11,205	5,540
Increase in cash surrender value of life insurance policies	(1,225)	(435)
Increase in restricted assets	(6,872)	(1,108)
Issuance of notes receivable	4,410	250
Proceeds from sale of fixed assets	3	4
Capital expenditures	(7,859)	(20,746)
Repayments of notes receivable	5,106	933
Purchase of subsidiaries	0	(250)
Pay downs of investment securities	5,743	690
Proceeds from sale of preferred securities	1,000	0
Investments in real estate held for sale	(12,512)	0
Net cash used in investing activities	(62,082)	(195,807)
Cash flows from financing activities:
Proceeds from issuance of debt	1,519	413,918
Deferred financing costs	(624)	(12,360)
Repayments of debt	(4,968)	(10,305)
Borrowings under revolver	130,691	645,894
Repayments on revolver	(146,655)	(673,866)
Dividends and distributions on common stock	(139,430)	(122,051)
Distributions to non-controlling interest	(564)	(4,861)
Proceeds from exercise of Vector options	1,321	4,407
Tax benefit of options exercised	756	937
Net cash (used in) provided by financing activities	(157,954)	241,713
Net (decrease) increase in cash and cash equivalents	(80,018)	145,950
Cash and cash equivalents, beginning of period	326,365	234,466
Cash and cash equivalents, end of period	$ 246,347	$ 380,416

XML

Investments and Fair Value Measurements Fair Value Inputs, Quantitative Information (Details) - Significant Unobservable Inputs (Level 3) - Fair Value, Measurements, Recurring - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	$ 577	$ 2,342
Fair value of derivatives embedded within convertible debt	149,739	169,386
Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Warrants	577	2,342
Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair value of derivatives embedded within convertible debt	$ 149,739	$ 169,386
Warrants (1) | Option Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 2.11	$ 3.95
Exercise price (dollars per share)	$ 1.68	$ 1.68
Term (in years)	1 year 1 month 6 days	1 year 10 months 2 days
Volatility	39.23%	44.42%
Dividend rate	0.00%	0.00%
Risk-free return	0.70%	0.70%
Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Stock price (dollars per share)	$ 22.61	$ 21.31
Volatility	18.72%	16.00%
Assumed annual stock dividend	5.00%	5.00%
Assumed annual cash dividend (dollars per share)	$ 1.60	$ 1.60
Convertible trading price	111.63%	106.80%
Implied credit spread	6.14%	6.75%
Minimum [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%	6.25%
Maximum [Member] | Derivative Financial Instruments, Liabilities [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Implied credit spread	6.50%	7.25%

XML

Summary of Significant Accounting Policies (Other Current Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Accounts payable	$ 11,966	$ 10,856
Accrued promotional expenses	20,053	20,191
Accrued excise and payroll taxes payable, net	5,034	23,172
Accrued interest	16,121	28,321
Commissions payable	14,942	9,523
Accrued salary and benefits	17,232	16,009
Other current liabilities	26,455	18,683
Total other current liabilities	$ 111,803	$ 126,755

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

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Notes payable, long-term debt and other obligations

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

	September 30, 2015			December 31, 2014
Vector:
7.75% Senior Secured Notes due 2021, including premium of $8,337 and $9,275	$	608,337		$	609,275
6.75% Variable Interest Senior Convertible Note due 2015	—			25,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $136,365 and $146,634*	93,635			83,366
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $89,454 and $98,831*	169,296			159,919
Liggett:
Revolving credit facility	1,803			17,767
Term loan under credit facility	3,368			3,589
Equipment loans	10,919			13,966
Other	289			469
Total notes payable, long-term debt and other obligations	887,647			913,351
Less:
Current maturities	(7,957		)	(52,640		)
Amount due after one year	$	879,690		$	860,711

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($0 at September 30, 2015 and $884 at December 31, 2014, respectively), the 7.5% Variable Interest Senior Convertible Notes ($75,788 at September 30, 2015 and $87,638 at December 31, 2014, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($73,951 at September 30, 2015 and $80,864 at December 31, 2014, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

Schedule of conversion rates for all convertible debt outstanding

The conversion rates for all convertible debt outstanding as of September 30, 2015 and December 31, 2014, are summarized below:

	September 30, 2015			December 31, 2014
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	—	—	$	10.69	93.5572
7.5% Variable Interest Senior Convertible Notes due 2019	$	15.98	62.5743	$	15.98	62.5743
5.5% Variable Interest Senior Convertible Debentures due 2020	$	24.64	40.5891	$	24.64	40.5891

Schedule of non-cash interest expense - Vector

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Amortization of debt discount, net	$	6,868	$	14,277	$	18,708	$	41,180
Amortization of deferred finance costs	1,085		1,147		3,073		2,910
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
	$	7,953	$	16,418	$	21,781	$	49,202

Schedule of fair value of notes payable and long-term debt

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2015					December 31, 2014
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	887,647	(1)	$	1,285,711	$	913,351	(1)	$	1,313,711

______________________

⁽¹⁾ The carrying value does not include the carrying value of the embedded derivative. See Note 11.

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New Valley LLC (Tables)

9 Months Ended

Sep. 30, 2015

New Valley LLC [Abstract]

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, 2015		December 31, 2014
Milanosesto Holdings (Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (1107 Broadway)	9,522		6,383
The Marquand	13,900		12,000
11 Beach Street	11,928		12,328
20 Times Square (701 Seventh Avenue)	13,095		12,481
111 Murray Street	16,114		27,319
357 West (160 Leroy Street)	1,950		1,467
PUBLIC Chrystie House (Chrystie Street)	5,297		3,300
The Dutch (25-19 43rd Avenue)	980		733
Queens Plaza (23-10 Queens Plaza South)	14,732		11,082
87 Park (8701 Collins Avenue)	5,654		6,144
125 Greenwich Street	11,193		9,308
West Hollywood Edition (9040 Sunset Boulevard)	5,604		5,604
76 Eleventh Avenue	17,000		—
Monad Terrace	6,438		—
Condominium and Mixed Use Development	133,407		108,149
Maryland Portfolio	1,377		3,234
ST Portfolio	16,881		15,283
Apartment Buildings	18,258		18,517
Park Lane Hotel	19,373		19,341
Hotel Taiwana	7,337		7,629
Coral Beach and Tennis Club	3,023		2,816
Hotels	29,733		29,786
The Plaza at Harmon Meadow	5,638		—
Commercial	5,638		—
Other	1,979		1,971
Investments in real estate ventures	$	194,052	$	163,460

Schedule of consolidated real estate investments

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

	September 30, 2015		December 31, 2014
Escena, net	$	10,451	$	10,643
Sagaponack	12,512		—
Real estate held for sale, net	$	22,963	$	10,643

Investment in Escena

Escena.  The assets of “Escena, net” are as follows:

	September 30, 2015			December 31, 2014
Land and land improvements	$	8,902		$	8,953
Building and building improvements	1,873			1,865
Other	1,596			1,568
	12,371			12,386
Less accumulated depreciation	(1,920		)	(1,743		)
	$	10,451		$	10,643

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Contingencies (Details)			1 Months Ended													3 Months Ended			9 Months Ended			12 Months Ended				25 Months Ended	78 Months Ended
	Apr. 15, 2015 USD ($)	May. 15, 2013 case	Nov. 30, 2014 USD ($)	Jun. 30, 2014 state	Dec. 31, 2013 USD ($)	Oct. 31, 2013 USD ($) case	May. 31, 2013 state	Dec. 31, 2012 state	Mar. 31, 2012 case	Jun. 30, 2010 person	May. 31, 2009	May. 31, 2003 USD ($) plaintiff	Jul. 31, 2000 USD ($)	Apr. 30, 2000 USD ($) plaintiff	Nov. 30, 1998 state	Sep. 30, 2015 USD ($) case	Mar. 31, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) defendant case state sponsorship	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($) state	Dec. 31, 2014 USD ($) state	Dec. 31, 2012	Dec. 31, 2010 USD ($) yr	Dec. 31, 2003 USD ($) state	Mar. 31, 1998 state	Sep. 30, 2012 state	Jul. 30, 2015 USD ($)	Jul. 13, 2015 plaintiff case claims	Apr. 30, 2015 USD ($)	Apr. 30, 2014 USD ($)	Nov. 30, 2011 state	Jun. 30, 2009 USD ($)	Dec. 31, 2001 case
Loss Contingencies [Line Items]
Litigation settlement and judgment expense																$ 3,750,000		$ 225,000	$ 5,843,000	$ 1,725,000
Loss Contingency Accrual [Roll Forward]
Payments due under Master Settlement Agreement, Current																	$ 26,322,000		26,322,000
Payments due under Master Settlement Agreement, Non-Current																	25,809,000		25,809,000
Litigation Accruals, Non-Current																	25,700,000		25,700,000
Payments due under Master Settlement Agreement, Current																92,952,000			92,952,000			$ 26,322,000
Payments due under Master Settlement Agreement, Non-Current																20,094,000			20,094,000			25,809,000
Litigation Accruals, Non-Current																24,072,000			24,072,000			25,700,000
Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Total, Current																	29,471,000		29,471,000	84,658,000		84,658,000
Expenses																			89,607,000	85,200,000
NPM Settlement Adjustment																			0	0
Change in MSA obligations capitalized as inventory																			1,536,000	(917,000)
Payments																			(23,993,000)	(78,165,000)
Reclassification to non-current liabilities																			3,305,000	3,918,000
Interest on withholding																			666,000	203,000
Total, Current					$ 84,658,000											100,592,000		94,897,000	100,592,000	94,897,000		29,471,000
Non-Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Total, Non-Current																	51,509,000		51,509,000	54,629,000		54,629,000
Expenses																			(195,000)	0
NPM Settlement Adjustment																			(5,715,000)	(1,419,000)
Change in MSA obligations capitalized as inventory																			0	0
Payments																			0	0
Reclassification to non-current liabilities																			(3,305,000)	(3,918,000)
Interest on withholding																			1,872,000	1,546,000
Total, Non-Current					54,629,000											$ 44,166,000		50,838,000	$ 44,166,000	50,838,000		51,509,000
Additional Synergy Exposure Cases [Member] | Maryland [Member]
Loss Contingencies [Line Items]
Cases pending | case																20			20
Liggett Only Cases [Member]
Loss Contingencies [Line Items]
Cases pending | case																3			3
Master Settlement Agreement [Member]
Loss Contingencies [Line Items]
Brand name sponsorship period																			12 months
Master Settlement Agreement [Member] | Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Payments due under Master Settlement Agreement, Current																	26,322,000		$ 26,322,000	25,348,000		25,348,000
Expenses																			83,236,000	83,159,000
NPM Settlement Adjustment																			0	0
Change in MSA obligations capitalized as inventory																			1,536,000	(917,000)
Payments																			(18,142,000)	(16,343,000)
Reclassification to non-current liabilities																			0	343,000
Interest on withholding																			0	0
Payments due under Master Settlement Agreement, Current					25,348,000											$ 92,952,000		91,590,000	92,952,000	91,590,000		26,322,000
Master Settlement Agreement [Member] | Non-Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Payments due under Master Settlement Agreement, Non-Current																	25,809,000		25,809,000	27,571,000		27,571,000
Expenses																			0	0
NPM Settlement Adjustment																			(5,715,000)	(1,419,000)
Change in MSA obligations capitalized as inventory																			0	0
Payments																			0	0
Reclassification to non-current liabilities																			0	(343,000)
Interest on withholding																			0	0
Payments due under Master Settlement Agreement, Non-Current					27,571,000											$ 20,094,000		25,809,000	$ 20,094,000	25,809,000		25,809,000
Master Settlement Agreement [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Number of brand name sponsorships allowed | sponsorship																			1
Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]
Loss Contingencies [Line Items]
Annual payment requirement																			$ 9,000,000,000			$ 117,800,000
NPM Adjustment [Member]
Loss Contingencies [Line Items]
Number of people on arbitration panel | person										3
Aggregate number of settling states | state																			24			20					49
Amounts not expensed by the Company																									$ 1,200,000,000
Courts that did not rule | state																									1
Courts that decided the issue | state																									48
Settling states | state				2			2	20																	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 | state																																16
Non-settling states | state																					15
Non-settling states that did not diligently enforce escrow statutes | state																					6
Engle Progeny Cases [Member]
Loss Contingencies [Line Items]
Number of cases declined for review by supreme court | case									2
Engle Case Class Action [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement													$ 145,000,000,000
Parsons v. AC & S Inc. [Member]
Loss Contingencies [Line Items]
Damages sought																			$ 1,000,000
Number of defendants | defendant																			3
Hess Case [Member]
Loss Contingencies [Line Items]
Term case tried prior to final decision																			12 years
Tobacco Litigation Personal Injury Cases [Member]
Loss Contingencies [Line Items]
Cases pending | case																25			25										30					750
Claims scheduled for trial | claims																													6
Number of plaintiffs in each trial | plaintiff																													5
Tobacco Litigation Personal Injury Cases [Member] | Cases Ending in Mistrial [Member]
Loss Contingencies [Line Items]
Cases dismissed | case		2
Cases settled | case		1
Department of Justice Lawsuit [Member]
Loss Contingencies [Line Items]
Required reporting period											10 years
Pending Litigation [Member] | Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Litigation Accruals, Current																	3,149,000		$ 3,149,000	59,310,000		$ 59,310,000
Expenses																			6,371,000	2,041,000
NPM Settlement Adjustment																			0	0
Change in MSA obligations capitalized as inventory																			0	0
Payments																			(5,851,000)	(61,822,000)
Reclassification to non-current liabilities																			3,305,000	3,575,000
Interest on withholding																			666,000	203,000
Litigation Accruals, Current					59,310,000											$ 7,640,000		3,307,000	7,640,000	3,307,000		3,149,000
Pending Litigation [Member] | Non-Current Liabilities [Member]
Loss Contingency Accrual [Roll Forward]
Litigation Accruals, Non-Current																	25,700,000		25,700,000	27,058,000		27,058,000
Expenses																			(195,000)	0
NPM Settlement Adjustment																			0	0
Change in MSA obligations capitalized as inventory																			0	0
Payments																			0	0
Reclassification to non-current liabilities																			(3,305,000)	(3,575,000)
Interest on withholding																			1,872,000	1,546,000
Litigation Accruals, Non-Current					27,058,000											$ 24,072,000		25,029,000	$ 24,072,000	25,029,000		$ 25,700,000
Liggett and Vector Tobacco [Member]
Loss Contingencies [Line Items]
Total cigarettes sold																3.40%			3.40%
Liggett and Vector Tobacco [Member] | Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement	$ 17,800,000				$ 100,000,000
Liggett and Vector Tobacco [Member] | NPM Adjustment [Member]
Loss Contingencies [Line Items]
Gain (loss) related to litigation settlement																					$ 5,700,000
Amounts expensed or accrued																$ 20,000,000			$ 20,000,000
Amount remaining in disputed payment accounts																23,000,000			23,000,000
Settlement adjustment credit																6,947,000			6,947,000											$ 1,940,000	$ 1,733,000
Liggett [Member]
Loss Contingencies [Line Items]
Legal expenses and other litigation costs																5,355,000		2,108,000	11,068,000	7,282,000
Bonds																12,268,000			12,268,000
Amount of litigation settlement																			29,547,000
Damages paid																			(17,978,000)
Punitive damages																			18,400,000
Punitive damages paid																			(1,000,000)
Amounts expensed or accrued																$ 0			$ 0
Liggett [Member] | Florida [Member]
Loss Contingencies [Line Items]
Cases pending | case																29			29
Liggett [Member] | New York [Member]
Loss Contingencies [Line Items]
Cases pending | case																8			8
Liggett [Member] | Maryland [Member]
Loss Contingencies [Line Items]
Cases pending | case																12			12
Liggett [Member] | Louisiana [Member]
Loss Contingencies [Line Items]
Cases pending | case																2			2
Liggett [Member] | West Virginia [Member]
Loss Contingencies [Line Items]
Cases pending | case																2			2
Liggett [Member] | Missouri [Member]
Loss Contingencies [Line Items]
Cases pending | case																1			1
Liggett [Member] | Ohio [Member]
Loss Contingencies [Line Items]
Cases pending | case																1			1
Liggett [Member] | State Cases [Member]
Loss Contingencies [Line Items]
Cases pending | case																285			285
Liggett [Member] | West Virginia State Court Cases [Member]
Loss Contingencies [Line Items]
Cases pending | case																100			100
Liggett [Member] | Individual Actions [Member]
Loss Contingencies [Line Items]
Cases pending | case																55			55
Liggett [Member] | Class Actions [Member]
Loss Contingencies [Line Items]
Cases pending | case																3			3
Liggett [Member] | Health Care Cost Recovery Actions [Member]
Loss Contingencies [Line Items]
Cases pending | case																1			1
Liggett [Member] | Gross Versus Net Dispute [Member]
Loss Contingencies [Line Items]
Amounts expensed or accrued																$ 8,500,000			$ 8,500,000									$ 16,000,000
Percentage of Total Cigarettes Sold That Exceeds Market Share Exemption																1.25%			1.25%
Liggett [Member] | Master Settlement Agreement [Member]
Loss Contingencies [Line Items]
Number of states not included in settlement agreement | state															4
Liggett [Member] | Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]
Loss Contingencies [Line Items]
Number of States | state															46											45
MSA payment obligations																$ 0			$ 0
Percentage of Total Cigarettes Sold That Exceeds Market Share Exemption																1.65%			1.65%
Liggett [Member] | Minnesota Settlement [Member]
Loss Contingencies [Line Items]
Annual payment requirement																									$ 100,000
Liggett [Member] | Florida Settlement [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																								$ 1,200,000
Annual payment requirement																								$ 250,000
Years annual payments required | yr																								21
Liggett [Member] | Florida Settlement [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Years annual payments required that are subject to inflation adjustment | yr																								12
Liggett [Member] | Mississippi Settlement [Member]
Loss Contingencies [Line Items]
Term of notice from state																							60 days
Liggett [Member] | NPM Adjustment [Member]
Loss Contingencies [Line Items]
Loss Contingency, Settlement Adjustment Credit, Disputed Entitled Amount																															1,315,000
Agreed additional amount funded adjusted																															521,000
Settlement adjustment credit																$ 5,152,000		$ 1,400,000	$ 5,152,000	$ 1,400,000	$ 5,987,000										$ 6,441,000
Liggett [Member] | Engle Progeny Cases [Member]
Loss Contingencies [Line Items]
Bond cap																																	$ 200,000,000
Number of cases settled and dismissed | case						4,900													23
Number of plaintiff verdicts | case																15			15
Number of defense verdicts | case																8			8
Amount of litigation settlement						$ 110,000,000
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						$ 86,213,000											$ 643,000
Litigation settlement and judgement expense, amount discounted						$ 25,213,000
Discount rate						11.00%
Expected payments yearly for 2014 through 2017						$ 3,400,000
Claims scheduled for trial | case																9			9
Liggett [Member] | Engle Progeny Cases [Member] | Cases Settled without Litigation [Member]
Loss Contingencies [Line Items]
Number of cases settled and dismissed | case						4,900										5			168
Amount of litigation settlement																			$ 3,546,000
Liggett [Member] | Irimi and Cohen [Member]
Loss Contingencies [Line Items]
Number of plaintiff verdicts | case																2			2
Liggett [Member] | Engle Progency Cases Excluding Lukacs [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Cases with punitive damages | case																			4
Liggett [Member] | Engle Case Class Action [Member]
Loss Contingencies [Line Items]
Number of plaintiff verdicts | plaintiff												1
Number of defense verdicts | plaintiff												2
Amount of litigation settlement													$ 790,000,000	$ 12,704,000
Number of plaintiffs | plaintiff														3
Over turned judgment												$ 5,831,000
Liggett [Member] | Lukacs v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			$ 12,418,000
Punitive damages																			0
Liggett [Member] | Campbell v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			156,000
Punitive damages																			0
Liggett [Member] | Douglas v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			1,350,000
Punitive damages																			0
Liggett [Member] | Clay v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			349,000
Punitive damages																			1,000,000
Liggett [Member] | Putney v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			3,008,000
Punitive damages																			0
Liggett [Member] | Tullo v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			225,000
Punitive damages																			0
Liggett [Member] | Ward v R J Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			1,000
Punitive damages																			0
Liggett [Member] | Calloway v RJ Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			1,947,000
Punitive damages																			7,600,000
Liggett [Member] | Calloway v RJ Reynolds [Member] | Joint and Several Judgment [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			16,100,000
Liggett [Member] | Buchanan v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			2,750,000
Punitive damages																			0
Liggett [Member] | Buchanan v. R.J. Reynolds [Member] | Joint and Several Judgment [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			5,500,000
Liggett [Member] | Cohen v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			205,000
Punitive damages																			0
Liggett [Member] | Rizzuto v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			3,479,000
Punitive damages																			$ 0
Liggett [Member] | Lukacs, Campbell, Douglas, Clay, Tullo, Ward and Rizzuto [Member]
Loss Contingencies [Line Items]
Number of cases settled and dismissed | case																			7
Payments for legal settlements																			$ 20,312,000
Liggett [Member] | Putney, Calloway, Cohen, Irimi, Lambert, Boatright and Caprio [Member]
Loss Contingencies [Line Items]
Minimum loss exposure																$ 0			0
Maximum loss exposure																26,219,000			26,219,000
Liggett [Member] | Irimi v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			31,000
Punitive damages																			0
Liggett [Member] | Lambert v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			3,600,000
Punitive damages																			9,500,000
Liggett [Member] | Boatright v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			0
Punitive damages			$ 300,000																300,000
Liggett [Member] | Caprio v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			28,000
Punitive damages																			0
Liggett [Member] | Buchanan Case [Member]
Loss Contingencies [Line Items]
Amounts expensed or accrued																$ 4,146,000			4,146,000
Liggett [Member] | Pending Litigation [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			11,569,000
Punitive damages																			17,400,000
Liggett [Member] | Pending Litigation [Member] | Lambert v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			$ 13,100,000
Liggett Only Cases [Member] | Other Individual Actions [Member]
Loss Contingencies [Line Items]
Cases pending | case																2			2
Liggett Only Cases [Member] | Rizzuto v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement																			$ 1,500,000
Liggett Only Cases [Member] | Hausrath [Member] | Individual Actions [Member]
Loss Contingencies [Line Items]
Cases pending | case																1			1
Vector Tobacco [Member] | Damages From Cigarette Smoking MSA and Other State Settlement Agreements [Member]
Loss Contingencies [Line Items]
MSA payment obligations																$ 0			$ 0
Percentage of Total Cigarettes Sold That Exceeds Market Share Exemption																0.28%			0.28%
Liggett Vector Brands [Member]
Loss Contingencies [Line Items]
Maximum loss exposure																$ 500,000			$ 500,000
Litigation settlement and judgment expense																			83,000
Letter of credit																100,000			100,000
Agreed additional amount funded																400,000			400,000
Agreed additional amount funded adjusted																$ 317,000			$ 317,000
Phillip Morris [Member] | Boatright v. R.J. Reynolds [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement			15,000,000
Punitive damages			19,700,000
Phillip Morris [Member] | Boatright v. R.J. Reynolds [Member] | Joint and Several Judgment [Member]
Loss Contingencies [Line Items]
Amount of litigation settlement			$ 12,750,000

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Summary of Significant Accounting Policies (Goodwill and Other Intangible Assets, net) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 70,791	$ 70,791
Intangibles with a finite life, net	7,178	11,670
Total goodwill and other intangible assets, net	265,480	269,972
Intangible asset associated with benefit under the MSA
Finite-Lived Intangible Assets [Line Items]
Indefinite life intangibles:	107,511	107,511
Trademark - Douglas Elliman
Finite-Lived Intangible Assets [Line Items]
Indefinite life intangibles:	$ 80,000	$ 80,000

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Contingencies (Tables)

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Cases Pending by State

The following table lists the number of Individual Actions by state:

State	Number of Cases
Florida	29
Maryland	12
New York	8
Louisiana	2
West Virginia	2
Missouri	1
Ohio	1

Schedule of Judgments Entered

As of September 30, 2015, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages (as adjusted) (1)	Liggett Punitive Damages	Status (2)
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	$—	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	156	—	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	1,350	—	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	—	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings regarding the amount of the award. Plaintiff filed a motion for rehearing which was denied. Both sides sought discretionary review from the Florida Supreme Court. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	225	—	Liggett satisfied the judgment and other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett, the case is concluded.
January 2012	Ward v. R.J. Reynolds	Escambia	1	—	Liggett satisfied the 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. Oral argument occurred on June 16, 2015.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. The court refused to reduce the award by decedent's comparative fault. Judgment was 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. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	205	—	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal. Defendants cross-appealed.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	3,479	—	Liggett settled its portion of the judgment for $1,500 and the case is concluded as to Liggett.
August 2014	Irimi v. R.J. Reynolds	Broward	31	—	In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed to the Fourth District Court of Appeal.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	A final judgment was entered against Liggett for $13,100. Liggett was the only defendant at trial. On appeal to the Second District Court of Appeal. The parties reached an agreement regarding the amount of plaintiff's trial level attorneys' fees and costs in the event plaintiff prevails on appeal.
November 2014	Boatright v. R.J. Reynolds	Polk	—	300	In November 2014, the jury awarded compensatory damages in the amount of $15,000 with 15% fault apportioned to plaintiff and 85% to Philip Morris.  The jury further assessed punitive damages against Philip Morris for $19,700 and Liggett for $300.  Post-trial motions were denied. A joint and several judgment was entered in the amount of $12,750 on the compensatory damages. Judgment was further entered against Liggett for $300 in punitive damages. On appeal to the Second District Court of Appeal.
June 2015	Caprio v. R.J. Reynolds	Broward	28	0	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  On appeal to the Fourth District Court of Appeal.
Total Damages Awarded:			29,547	18,400
Amounts paid or compromised:			(17,978)	(1,000)
Damages remaining on Appeal:			$11,569	$17,400
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault. The amounts listed above do not include attorneys' fees or statutory interest.
(2) See Exhibit 99.1 for a more complete description of the cases currently on appeal.

Schedule of Loss Contingencies

The activity in the Company's accruals for the MSA and tobacco litigation for the nine months ended September 30, 2015 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, 2015	$	26,322		$	3,149		$	29,471		$	25,809		$	25,700		$	51,509
Expenses	83,236			6,371			89,607			—			(195		)	(195		)
NPM Settlement adjustment	—			—			—			(5,715		)	—			(5,715		)
Change in MSA obligations capitalized as inventory	1,536			—			1,536			—			—			—
Payments	(18,142		)	(5,851		)	(23,993		)	—			—			—
Reclassification from non-current liabilities	—			3,305			3,305			—			(3,305		)	(3,305		)
Interest on withholding	—			666			666			—			1,872			1,872
Balance as of September 30, 2015	$	92,952		$	7,640		$	100,592		$	20,094		$	24,072		$	44,166

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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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs

The following table summarizes key information related to the Company's pension plans and other postretirement benefits:

	Pension Benefits												Other Postretirement Benefits
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2015			2014			2015			2014
Service cost — benefits earned during the period	$	133		$	131		$	398		$	392		$	2		$	2		$	6		$	7
Interest cost on projected benefit obligation	1,205			1,549			3,803			4,647			93			108			278			323
Expected return on assets	(1,814		)	(2,130		)	(5,627		)	(6,389		)	—			—			—			—
Settlement loss	—			—			1,607			—			—			—			—			—
Amortization of net loss (gain)	254			269			823			806			(24		)	(15		)	(73		)	(45		)
Net (income) expense	$	(222	)	$	(181	)	$	1,004		$	(544	)	$	71		$	95		$	211		$	285

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Condensed Consolidated Statement of Stockholders' (Deficiency) Equity (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Statement of Stockholders' Equity [Abstract]
Tax on note conversions	$ 367

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following table summarizes estimated restructuring charges and actual amounts expensed for the three and nine months ended September 30, 2015:

	Total Estimated Costs		Amounts expensed through September 30, 2015
Cash Charges
Employee severance and benefits	$	1,094	$	1,094
Lease termination costs	223		—
Other restructuring expenses	207		—
	1,524		1,094
Non-Cash:
Employee pension benefits	4,000		—
Point of Sale inventory impairment	454		454
	4,454		454
Total restructuring expenses	$	5,978	$	1,548

Schedule of Changes in Employee Severance and Benefits Liability

The following table presents the changes in the employee severance and benefits liability under the Tobacco segment restructuring plan:

Severance liability at July 1, 2015	$	—
Severance expense	1,094
Severance payments	—
Severance liability at September 30, 2015	$	1,094

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Summary of Significant Accounting Policies (Basic and Diluted Earnings Per Share (in shares)) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Weighted-average shares for basic EPS	118,023,224	108,374,350	117,660,001	106,464,835
Plus incremental shares related to stock options and non-vested restricted stock	134,315	120,354	175,097	118,724
Weighted-average shares for diluted EPS	118,157,539	108,494,704	117,835,098	106,583,559

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Notes Payable, Long-Term Debt and Other Obligations (Convertible Notes Table) (Details) - Convertible Debt [Member] - USD ($)		9 Months Ended	12 Months Ended
	Feb. 03, 2015	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Conversion basis amount		$ 1,000
6.75% Variable Interest Senior Convertible Note due 2014 - Vector
Debt Instrument [Line Items]
Conversion price		$ 0.00	$ 10.69
Note conversion (in shares)	2,338,930	0	93.5572
Variable Interest 7.50% Senior Convertible Debentures [Member]
Debt Instrument [Line Items]
Conversion price		$ 15.98	$ 15.98
Note conversion (in shares)		62.5743	62.5743
5.5% Variable Interest Senior Convertible Notes due 2020
Debt Instrument [Line Items]
Conversion price		$ 24.64	$ 24.64
Note conversion (in shares)		40.5891	40.5891

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 246,347	$ 326,365
Investment securities available for sale	288,376	346,043
Accounts receivable - trade, net	20,112	23,328
Inventories	90,695	90,323
Income taxes receivable, net	0	3,282
Restricted assets	2,834	2,595
Other current assets	37,824	36,718
Total current assets	686,188	828,654
Property, plant and equipment, net	76,367	84,112
Real estate held for sale, net	22,963	10,643
Long-term investments	53,648	40,292
Investments in real estate ventures	194,052	163,460
Restricted assets	18,647	12,013
Goodwill and other intangible assets, net	265,480	269,972
Prepaid pension costs	27,440	25,032
Other assets	54,016	58,893
Total assets	1,398,801	1,493,071
Current liabilities:
Current portion of notes payable and long-term debt	7,957	52,640
Current portion of fair value of derivatives embedded within convertible debt	0	884
Current payments due under the Master Settlement Agreement	92,952	26,322
Current portion of employee benefits	931	931
Income taxes payable, net	186	1,743
Litigation accruals	7,640	3,149
Deferred income taxes, net	7,321	28,479
Other current liabilities	111,803	126,755
Total current liabilities	228,790	240,903
Notes payable, long-term debt and other obligations, less current portion	879,690	860,711
Fair value of derivatives embedded within convertible debt	149,739	168,502
Non-current employee benefits	49,913	49,314
Deferred income taxes, net	96,497	94,510
Payments due under the Master Settlement Agreement	20,094	25,809
Litigation accruals	24,072	25,700
Other liabilities	6,833	5,570
Total liabilities	$ 1,455,628	$ 1,471,019
Commitments and contingencies (Note 7)
Stockholders' (deficiency) equity:
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 250,000,000 shares authorized, 122,592,329 and 118,646,261 shares issued and 122,592,329 and 114,501,014 shares outstanding	12,259	11,450
Additional paid-in capital	0	0
Accumulated deficit	(163,914)	(90,160)
Accumulated other comprehensive income	9,868	34,540
Treasury shares, at cost, 0 and 4,145,247	0	(12,857)
Total Vector Group Ltd. stockholders' deficiency	(141,787)	(57,027)
Non-controlling interest	84,960	79,079
Total stockholders' (deficiency) equity	(56,827)	22,052
Total liabilities and stockholders' (deficiency) equity	$ 1,398,801	$ 1,493,071

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Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventories [Line Items]
Leaf tobacco	$ 50,672	$ 49,948
Other raw materials	4,184	3,532
Work-in-process	624	879
Finished goods	66,266	62,876
E-Cigarettes	106	3,079
Inventories at current cost	121,852	120,314
LIFO adjustments	(31,157)	(29,991)
Inventory, net	90,695	90,323
Capitalized MSA cost in finished goods inventory	15,906	14,369
Liggett [Member] | Leaf tobacco [Member]
Inventories [Line Items]
Purchase commitments	14,796
Leaf tobacco [Member]
Inventories [Line Items]
LIFO adjustments	(20,321)	(19,941)
Other raw materials [Member]
Inventories [Line Items]
LIFO adjustments	(900)	(861)
Work-in-Process [Member]
Inventories [Line Items]
LIFO adjustments	(41)	(39)
Finished goods [Member]
Inventories [Line Items]
LIFO adjustments	(9,887)	(9,054)
E-Cigarettes [Member]
Inventories [Line Items]
LIFO adjustments	$ (8)	$ (96)

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 15,849	$ 19,705	$ 56,770	$ 36,265
Net unrealized (losses) gains on investment securities available for sale:
Change in net unrealized (losses) gains	(50,067)	19,184	(43,550)	22,292
Net unrealized losses (gains) reclassified into net income	9,091	(33)	(3,748)	38
Net unrealized (losses) gains on investment securities available for sale	(40,976)	19,151	(47,298)	22,330
Net unrealized (losses) gains on long-term investments accounted for under the equity method:
Change in net unrealized (losses) gains	0	(4,694)	1,190	3,920
Net unrealized losses reclassified into net income	0	0	(1,624)	0
Net unrealized (losses) gains on long-term investments accounted for under the equity method	0	(4,694)	2,814	3,920
Net change in forward contracts	15	16	47	48
Net change in pension-related amounts
Net loss arising during the year	0	0	1,607	0
Amortization of loss	229	147	750	442
Net change in pension-related amounts	229	147	2,357	442
Other comprehensive (loss) income	(40,732)	14,620	(42,080)	26,740
Income tax effect on:
Change in net unrealized (losses) gains on investment securities	20,702	(7,438)	18,008	(9,218)
Net unrealized losses (gains) reclassified into net income on investment securities	(3,759)	13	1,550	(16)
Change in unrealized (losses) gains on long-term investments accounted for under the equity method	0	1,933	(484)	(1,621)
Net unrealized losses reclassified into net income on long-term investments accounted for under the equity method	0	0	(672)	0
Forward contracts	(6)	(8)	(19)	(20)
Pension-related amounts	(95)	(105)	(975)	(31)
Income tax provision on other comprehensive (loss) income	16,842	(5,605)	17,408	(10,906)
Other comprehensive (loss) income, net of tax	(23,890)	9,015	(24,672)	15,834
Comprehensive (loss) income	(8,041)	28,720	32,098	52,099
Comprehensive income attributed to non-controlling interest	(3,644)	(4,826)	(5,741)	(10,881)
Comprehensive (loss) income attributed to Vector Group Ltd.	$ (11,685)	$ 23,894	$ 26,357	$ 41,218

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Restructuring - Schedule of Changes in Employee Severance and Benefits Liability (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Restructuring Reserve [Roll Forward]
Severance expense	$ 1,548	$ 0	$ 1,548	$ 0
Tobacco [Member] | Employee Severance [Member]
Restructuring Reserve [Roll Forward]
Severance liability at July 1, 2015	0
Severance expense	1,094
Severance payments	0
Severance liability at September 30, 2015	$ 1,094		$ 1,094

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 and 2014 follows:

							Real			Corporate
	Tobacco			E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2015
Revenues	$	264,170		$	201		$	185,563		$	—		$	449,934
Operating income (loss)	63,630		(1)	(2,146		)	12,227			(4,106		)	69,605
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Depreciation and amortization	2,850			—			3,388			435			6,673
Three months ended September 30, 2014
Revenues	$	264,520		$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993		(2)	(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
Nine months ended September 30, 2015
Revenues	$	747,145		$	881		$	478,841		$	—		$	1,226,867
Operating income (loss)	169,515		(3)	(7,710		)	21,270			(13,475		)	169,600
Equity income from real estate ventures	—			—			1,278			—			1,278
Depreciation and amortization	8,717			—			9,372			1,307			19,396
Capital expenditures	3,305			—			4,554			—			7,859
Nine months ended September 30, 2014
Revenues	$	748,468		$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395		(4)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—			—			3,002			—			3,002
Depreciation and amortization	7,934			—			9,709			956			18,599
Capital expenditures	7,911			—			5,614			7,221			20,746

⁽¹⁾ Operating income includes $5,715 of income from MSA Settlement, $3,750 of litigation judgment expense and $1,548 of restructuring expense.

⁽²⁾ Operating income includes $225of litigation judgment expense.

⁽³⁾ Operating income includes $5,715 of income from MSA Settlement, $5,843 of litigation judgment expense, $1,548 of restructuring expense, and $1,607 of pension settlement expense.

⁽⁴⁾  Operating income includes $1,419 of income from MSA Settlement and $1,725 of litigation judgment expense.

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Condensed Consolidating Financial Information Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 246,347	$ 326,365	$ 380,416	$ 234,466
Investment securities available for sale	288,376	346,043
Accounts receivable - trade, net	20,112	23,328
Intercompany receivables	0	0
Inventories	90,695	90,323
Deferred income taxes	0	0
Income taxes receivable, net	0	3,282
Restricted assets	2,834	2,595
Other current assets	37,824	36,718
Total current assets	686,188	828,654
Property, plant and equipment, net	76,367	84,112
Real estate held for sale, net	22,963	10,643
Long-term investments at cost	53,648	40,292
Investments in real estate ventures	194,052	163,460
Investments in consolidated subsidiaries	0	0
Restricted assets	18,647	12,013
Goodwill and other intangible assets, net	265,480	269,972
Prepaid pension costs	27,440	25,032
Other assets	54,016	58,893
Total assets	1,398,801	1,493,071
Current liabilities:
Current portion of notes payable and long-term debt	7,957	52,640
Current portion of fair value of derivatives embedded within convertible debt	0	884
Current portion of employee benefits	931	931
Intercompany payables	0	0
Income taxes payable, net	186	1,743
Litigation accruals and current payments due under the Master Settlement Agreement	100,592	29,471
Deferred income taxes, net	7,321	28,479
Other current liabilities	111,803	126,755
Total current liabilities	228,790	240,903
Notes payable, long-term debt and other obligations, less current portion	879,690	860,711
Fair value of derivatives embedded within convertible debt	149,739	168,502
Non-current employee benefits	49,913	49,314
Deferred income taxes, net	96,497	94,510
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	50,999	57,079
Total liabilities	$ 1,455,628	$ 1,471,019
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	$ (141,787)	$ (57,027)
Non-controlling interest	84,960	79,079
Total stockholders' (deficiency) equity	(56,827)	22,052
Total liabilities and stockholders' (deficiency) equity	1,398,801	1,493,071
Parent/Issuer [Member]
Current assets:
Cash and cash equivalents	94,546	211,751	257,309	151,342
Investment securities available for sale	242,529	278,010
Accounts receivable - trade, net	0	0
Intercompany receivables	1,083	795
Inventories	0	0
Deferred income taxes	0
Income taxes receivable, net	11,822	1,055
Restricted assets	0	0
Other current assets	912	899
Total current assets	350,892	492,510
Property, plant and equipment, net	1,944	2,648
Real estate held for sale, net	0	0
Long-term investments at cost	53,132	39,594
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	525,652	518,963
Restricted assets	1,709	1,707
Goodwill and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	40,528	45,904
Total assets	973,857	1,101,326
Current liabilities:
Current portion of notes payable and long-term debt	0	25,000
Current portion of fair value of derivatives embedded within convertible debt		884
Current portion of employee benefits	0	0
Intercompany payables	0	0
Income taxes payable, net	0	0
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes, net	9,260	17,452
Other current liabilities	24,329	36,653
Total current liabilities	33,589	79,989
Notes payable, long-term debt and other obligations, less current portion	871,268	852,560
Fair value of derivatives embedded within convertible debt	149,739	168,502
Non-current employee benefits	33,651	32,842
Deferred income taxes, net	24,862	23,539
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,535	921
Total liabilities	$ 1,115,644	$ 1,158,353
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	$ (141,787)	$ (57,027)
Non-controlling interest	0	0
Total stockholders' (deficiency) equity	(141,787)	(57,027)
Total liabilities and stockholders' (deficiency) equity	973,857	1,101,326
Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	26,842	9,724	19,498	11,812
Investment securities available for sale	45,847	68,033
Accounts receivable - trade, net	12,099	18,024
Intercompany receivables	0	267
Inventories	90,695	90,323
Deferred income taxes	1,939
Income taxes receivable, net	0	463
Restricted assets	1,420	1,181
Other current assets	5,103	9,133
Total current assets	183,945	197,148
Property, plant and equipment, net	55,133	61,149
Real estate held for sale, net	0	0
Long-term investments at cost	0	0
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	0	0
Restricted assets	16,938	10,306
Goodwill and other intangible assets, net	107,511	107,511
Prepaid pension costs	27,440	25,032
Other assets	11,790	10,743
Total assets	402,757	411,889
Current liabilities:
Current portion of notes payable and long-term debt	7,731	27,248
Current portion of fair value of derivatives embedded within convertible debt		0
Current portion of employee benefits	931	931
Intercompany payables	0	0
Income taxes payable, net	12,005	0
Litigation accruals and current payments due under the Master Settlement Agreement	100,592	29,471
Deferred income taxes, net	0	11,027
Other current liabilities	41,751	58,677
Total current liabilities	163,010	127,354
Notes payable, long-term debt and other obligations, less current portion	8,407	8,120
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	16,262	16,472
Deferred income taxes, net	35,905	32,301
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	44,356	51,775
Total liabilities	$ 267,940	$ 236,022
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	$ 134,817	$ 175,867
Non-controlling interest	0	0
Total stockholders' (deficiency) equity	134,817	175,867
Total liabilities and stockholders' (deficiency) equity	402,757	411,889
Subsidiary Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	124,959	104,890	103,609	71,312
Investment securities available for sale	0	0
Accounts receivable - trade, net	8,013	5,304
Intercompany receivables	0	0
Inventories	0	0
Deferred income taxes	0
Income taxes receivable, net	0	21
Restricted assets	1,414	1,414
Other current assets	31,809	26,686
Total current assets	166,195	138,315
Property, plant and equipment, net	19,290	20,315
Real estate held for sale, net	22,963	10,643
Long-term investments at cost	516	698
Investments in real estate ventures	194,052	163,460
Investments in consolidated subsidiaries	0	0
Restricted assets	0	0
Goodwill and other intangible assets, net	157,969	162,461
Prepaid pension costs	0	0
Other assets	1,698	2,246
Total assets	562,683	498,138
Current liabilities:
Current portion of notes payable and long-term debt	226	392
Current portion of fair value of derivatives embedded within convertible debt		0
Current portion of employee benefits	0	0
Intercompany payables	1,083	1,062
Income taxes payable, net	3	0
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes, net	0	0
Other current liabilities	45,723	31,425
Total current liabilities	47,035	32,879
Notes payable, long-term debt and other obligations, less current portion	15	31
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	0	0
Deferred income taxes, net	35,730	38,670
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	4,108	4,383
Total liabilities	$ 86,888	$ 75,963
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	$ 390,835	$ 343,096
Non-controlling interest	84,960	79,079
Total stockholders' (deficiency) equity	475,795	422,175
Total liabilities and stockholders' (deficiency) equity	562,683	498,138
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	(1,083)	(1,062)
Inventories	0	0
Deferred income taxes	(1,939)
Income taxes receivable, net	(11,822)	1,743
Restricted assets	0	0
Other current assets	0	0
Total current assets	(14,844)	681
Property, plant and equipment, net	0	0
Real estate held for sale, net	0	0
Long-term investments at cost	0	0
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	(525,652)	(518,963)
Restricted assets	0	0
Goodwill and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	0	0
Total assets	(540,496)	(518,282)
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
Current portion of employee benefits	0	0
Intercompany payables	(1,083)	(1,062)
Income taxes payable, net	(11,822)	1,743
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Deferred income taxes, net	(1,939)	0
Other current liabilities	0	0
Total current liabilities	(14,844)	681
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, net	0	0
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	0	0
Total liabilities	$ (14,844)	$ 681
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	$ (525,652)	$ (518,963)
Non-controlling interest	0	0
Total stockholders' (deficiency) equity	(525,652)	(518,963)
Total liabilities and stockholders' (deficiency) equity	$ (540,496)	$ (518,282)

XML

Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2015

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, 2015, 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, 2015
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	94,546		$	26,842	$	124,959	$	—		$	246,347
Investment securities available for sale	242,529			45,847		—		—			288,376
Accounts receivable - trade, net	—			12,099		8,013		—			20,112
Intercompany receivables	1,083			—		—		(1,083		)	—
Inventories	—			90,695		—		—			90,695
Deferred income taxes	—			1,939		—		(1,939		)	—
Income taxes receivable, net	11,822			—		—		(11,822		)	—
Restricted assets	—			1,420		1,414		—			2,834
Other current assets	912			5,103		31,809		—			37,824
Total current assets	350,892			183,945		166,195		(14,844		)	686,188
Property, plant and equipment, net	1,944			55,133		19,290		—			76,367
Real estate held for sale, net	—			—		22,963		—			22,963
Long-term investments	53,132			—		516		—			53,648
Investments in real estate ventures	—			—		194,052		—			194,052
Investments in consolidated subsidiaries	525,652			—		—		(525,652		)	—
Restricted assets	1,709			16,938		—		—			18,647
Goodwill and other intangible assets, net	—			107,511		157,969		—			265,480
Prepaid pension costs	—			27,440		—		—			27,440
Other assets	40,528			11,790		1,698		—			54,016
Total assets	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	7,731	$	226	$	—		$	7,957
Current portion of employee benefits	—			931		—		—			931
Intercompany payables	—			—		1,083		(1,083		)	—
Income taxes payable, net	—			12,005		3		(11,822		)	186
Litigation accruals and current payments due under the Master Settlement Agreement	—			100,592		—		—			100,592
Deferred income taxes, net	9,260			—		—		(1,939		)	7,321
Other current liabilities	24,329			41,751		45,723		—			111,803
Total current liabilities	33,589			163,010		47,035		(14,844		)	228,790
Notes payable, long-term debt and other obligations, less current portion	871,268			8,407		15		—			879,690
Fair value of derivatives embedded within convertible debt	149,739			—		—		—			149,739
Non-current employee benefits	33,651			16,262		—		—			49,913
Deferred income taxes, net	24,862			35,905		35,730		—			96,497
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,535			44,356		4,108		—			50,999
Total liabilities	1,115,644			267,940		86,888		(14,844		)	1,455,628
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(141,787		)	134,817		390,835		(525,652		)	(141,787		)
Non-controlling interest	—			—		84,960		—			84,960
Total stockholders' (deficiency) equity	(141,787		)	134,817		475,795		(525,652		)	(56,827		)
Total liabilities and stockholders' (deficiency) equity	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801

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
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	492,510			197,148		138,315		681			828,654
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
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	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071
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, net	17,452			11,027		—		—			28,479
Other current liabilities	36,653			58,677		31,425		—			126,755
Total current liabilities	79,989			127,354		32,879		681			240,903
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, net	23,539			32,301		38,670		—			94,510
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	921			51,775		4,383		—			57,079
Total liabilities	1,158,353			236,022		75,963		681			1,471,019
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' (deficiency) equity	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	264,480		$	185,563		$	(109	)	$	449,934
Expenses:
Cost of sales	—			174,839			121,078			—			295,917
Operating, selling, administrative and general expenses	6,372			20,712			52,139			(109		)	79,114
Litigation settlement and judgment expense	—			3,750			—			—			3,750
Management fee expense	—			2,562			—			(2,562		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(6,372		)	61,069			12,346			2,562			69,605
Other income (expenses):
Interest expense	(31,609		)	(1,288		)	(1		)	—			(32,898		)
Change in fair value of derivatives embedded within convertible debt	7,044			—			—			—			7,044
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Equity loss from investments	(579		)	—			—			—			(579		)
Loss on sale of investment securities available for sale	(821		)	—			—			—			(821		)
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Equity income in consolidated subsidiaries	32,335			—			—			(32,335		)	—
Management fee income	2,562			—			—			(2,562		)	—
Other, net	(61		)	(111		)	305			—			133
(Loss) income before provision for income taxes	(1,725		)	51,683			11,734			(32,335		)	29,357
Income tax benefit (expense)	13,930			(24,043		)	(3,395		)	—			(13,508		)
Net income	12,205			27,640			8,339			(32,335		)	15,849
Net income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Net income attributed to Vector Group Ltd.	12,205			27,640			4,695			(32,335		)	12,205
Comprehensive income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Comprehensive (loss) income attributed to Vector Group Ltd.	$	(11,685	)	$	18,484		$	4,695		$	(23,179	)	$	(11,685	)

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 from 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
(Loss) income 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 Ltd.	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	748,394		$	478,841		$	(368	)	$	1,226,867
Expenses:
Cost of sales	—			507,833			309,306			—			817,139
Operating, selling, administrative and general expenses	20,266			64,604			148,235			(368		)	232,737
Litigation settlement and judgment expense	—			5,843			—			—			5,843
Management fee expense	—			7,687			—			(7,687		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(20,266		)	160,879			21,300			7,687			169,600
Other income (expenses):
Interest expense	(93,243		)	(3,158		)	(4		)	—			(96,405		)
Change in fair value of derivatives embedded within convertible debt	18,760			—			—			—			18,760
Equity income from real estate ventures	—			—			1,278			—			1,278
Equity loss from investments	(2,273		)	—			—			—			(2,273		)
(Loss) gain on sale of investment securities available for sale	(1,157		)	13,175			—			—			12,018
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Gain on liquidation of long-term investment	—			—			—			—			—
Equity income in consolidated subsidiaries	104,083			—			—			(104,083		)	—
Management fee income	7,687			—			—			(7,687		)	—
Other, net	1,859			409			1,286			—			3,554
Income before provision for income taxes	11,226			163,318			23,860			(104,083		)	94,321
Income tax benefit (expense)	39,803			(69,450		)	(7,904		)	—			(37,551		)
Net income	51,029			93,868			15,956			(104,083		)	56,770
Net income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Net income attributed to Vector Group Ltd.	51,029			93,868			10,215			(104,083		)	51,029
Comprehensive income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Comprehensive income attributed to Vector Group Ltd.	$	26,357		$	84,073		$	10,215		$	(94,288	)	$	26,357

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2014
	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
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income from investments	1,462			—			—			—			1,462
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 CASH FLOWS

				Nine Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	84,832		$	168,095		$	31,660		$	(144,569	)	$	140,018
Cash flows from investing activities:
Sale of investment securities	146,614			14,415			—			—			161,029
Maturities of investment securities	2,653			—			—			—			2,653
Purchase of investment securities	(156,521		)	(6,324		)	—			—			(162,845		)
Proceeds from sale or liquidation of long-term investments	—			—			182			—			182
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in real estate ventures	—			—			(43,280		)	—			(43,280		)
Distributions from investments in real estate ventures	—			—			11,205			—			11,205
Increase in cash surrender value of life insurance policies	(766		)	(459		)	—			—			(1,225		)
Increase in restricted assets	(2		)	(6,870		)	—			—			(6,872		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Investments in subsidiaries	(53,511		)	—			—			53,511			—
Proceeds from sale of fixed assets	—			3			—			—			3
Capital expenditures	—			(3,305		)	(4,554		)	—			(7,859		)
Repayments of notes receivable	1,106			—			4,000			—			5,106
Pay downs of investment securities	5,743			—			—			—			5,743
Proceeds from sale of preferred securities	—			—			1,000			—			1,000
Investments in real estate held for sale	—			—			(12,512		)	—			(12,512		)
Net cash used in investing activities	(64,684		)	(2,540		)	(48,369		)	53,511			(62,082		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			1,519			—			—			1,519
Deferred financing costs	—			(624		)	—			—			(624		)
Repayments of debt	—			(4,786		)	(182		)	—			(4,968		)
Borrowings under revolver	—			130,691			—			—			130,691
Repayments on revolver	—			(146,655		)	—			—			(146,655		)
Capital contributions received	—			5,633			47,878			(53,511		)	—
Intercompany dividends paid	—			(134,215		)	(10,354		)	144,569			—
Dividends and distributions on common stock	(139,430		)	—			—			—			(139,430		)
Distributions to non-controlling interest	—			—			(564		)	—			(564		)
Proceeds from exercise of Vector options	1,321			—			—			—			1,321
Tax benefit of options exercised	756			—			—			—			756
Net cash (used in) provided by financing activities	(137,353		)	(148,437		)	36,778			91,058			(157,954		)
Net (decrease) increase in cash and cash equivalents	(117,205		)	17,118			20,069			—			(80,018		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	94,546		$	26,842		$	124,959		$	—		$	246,347

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	173,046			—			—			—			173,046
Maturities of investment securities	517			—			—			—			517
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 investments in 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		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Pay downs of investment securities	690			—			—			—			690
Proceeds from sale of fixed assets	—			4			—			—			4
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from issuance of debt	408,750			40,168			—			(35,000		)	413,918
Deferred 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

XML

Condensed Consolidating Financial Information (Tables)

9 Months Ended

Sep. 30, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2015
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	94,546		$	26,842	$	124,959	$	—		$	246,347
Investment securities available for sale	242,529			45,847		—		—			288,376
Accounts receivable - trade, net	—			12,099		8,013		—			20,112
Intercompany receivables	1,083			—		—		(1,083		)	—
Inventories	—			90,695		—		—			90,695
Deferred income taxes	—			1,939		—		(1,939		)	—
Income taxes receivable, net	11,822			—		—		(11,822		)	—
Restricted assets	—			1,420		1,414		—			2,834
Other current assets	912			5,103		31,809		—			37,824
Total current assets	350,892			183,945		166,195		(14,844		)	686,188
Property, plant and equipment, net	1,944			55,133		19,290		—			76,367
Real estate held for sale, net	—			—		22,963		—			22,963
Long-term investments	53,132			—		516		—			53,648
Investments in real estate ventures	—			—		194,052		—			194,052
Investments in consolidated subsidiaries	525,652			—		—		(525,652		)	—
Restricted assets	1,709			16,938		—		—			18,647
Goodwill and other intangible assets, net	—			107,511		157,969		—			265,480
Prepaid pension costs	—			27,440		—		—			27,440
Other assets	40,528			11,790		1,698		—			54,016
Total assets	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	7,731	$	226	$	—		$	7,957
Current portion of employee benefits	—			931		—		—			931
Intercompany payables	—			—		1,083		(1,083		)	—
Income taxes payable, net	—			12,005		3		(11,822		)	186
Litigation accruals and current payments due under the Master Settlement Agreement	—			100,592		—		—			100,592
Deferred income taxes, net	9,260			—		—		(1,939		)	7,321
Other current liabilities	24,329			41,751		45,723		—			111,803
Total current liabilities	33,589			163,010		47,035		(14,844		)	228,790
Notes payable, long-term debt and other obligations, less current portion	871,268			8,407		15		—			879,690
Fair value of derivatives embedded within convertible debt	149,739			—		—		—			149,739
Non-current employee benefits	33,651			16,262		—		—			49,913
Deferred income taxes, net	24,862			35,905		35,730		—			96,497
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,535			44,356		4,108		—			50,999
Total liabilities	1,115,644			267,940		86,888		(14,844		)	1,455,628
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(141,787		)	134,817		390,835		(525,652		)	(141,787		)
Non-controlling interest	—			—		84,960		—			84,960
Total stockholders' (deficiency) equity	(141,787		)	134,817		475,795		(525,652		)	(56,827		)
Total liabilities and stockholders' (deficiency) equity	$	973,857		$	402,757	$	562,683	$	(540,496	)	$	1,398,801

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
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	492,510			197,148		138,315		681			828,654
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
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	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071
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, net	17,452			11,027		—		—			28,479
Other current liabilities	36,653			58,677		31,425		—			126,755
Total current liabilities	79,989			127,354		32,879		681			240,903
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, net	23,539			32,301		38,670		—			94,510
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	921			51,775		4,383		—			57,079
Total liabilities	1,158,353			236,022		75,963		681			1,471,019
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' (deficiency) equity	$	1,101,326		$	411,889	$	498,138	$	(518,282	)	$	1,493,071

Schedule of Condensed Income Statement

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	264,480		$	185,563		$	(109	)	$	449,934
Expenses:
Cost of sales	—			174,839			121,078			—			295,917
Operating, selling, administrative and general expenses	6,372			20,712			52,139			(109		)	79,114
Litigation settlement and judgment expense	—			3,750			—			—			3,750
Management fee expense	—			2,562			—			(2,562		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(6,372		)	61,069			12,346			2,562			69,605
Other income (expenses):
Interest expense	(31,609		)	(1,288		)	(1		)	—			(32,898		)
Change in fair value of derivatives embedded within convertible debt	7,044			—			—			—			7,044
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Equity loss from investments	(579		)	—			—			—			(579		)
Loss on sale of investment securities available for sale	(821		)	—			—			—			(821		)
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Equity income in consolidated subsidiaries	32,335			—			—			(32,335		)	—
Management fee income	2,562			—			—			(2,562		)	—
Other, net	(61		)	(111		)	305			—			133
(Loss) income before provision for income taxes	(1,725		)	51,683			11,734			(32,335		)	29,357
Income tax benefit (expense)	13,930			(24,043		)	(3,395		)	—			(13,508		)
Net income	12,205			27,640			8,339			(32,335		)	15,849
Net income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Net income attributed to Vector Group Ltd.	12,205			27,640			4,695			(32,335		)	12,205
Comprehensive income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Comprehensive (loss) income attributed to Vector Group Ltd.	$	(11,685	)	$	18,484		$	4,695		$	(23,179	)	$	(11,685	)

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 from 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
(Loss) income 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 Ltd.	$	23,894		$	28,367		$	8,202		$	(36,569	)	$	23,894

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	748,394		$	478,841		$	(368	)	$	1,226,867
Expenses:
Cost of sales	—			507,833			309,306			—			817,139
Operating, selling, administrative and general expenses	20,266			64,604			148,235			(368		)	232,737
Litigation settlement and judgment expense	—			5,843			—			—			5,843
Management fee expense	—			7,687			—			(7,687		)	—
Restructuring expenses	—			1,548			—			—			1,548
Operating (loss) income	(20,266		)	160,879			21,300			7,687			169,600
Other income (expenses):
Interest expense	(93,243		)	(3,158		)	(4		)	—			(96,405		)
Change in fair value of derivatives embedded within convertible debt	18,760			—			—			—			18,760
Equity income from real estate ventures	—			—			1,278			—			1,278
Equity loss from investments	(2,273		)	—			—			—			(2,273		)
(Loss) gain on sale of investment securities available for sale	(1,157		)	13,175			—			—			12,018
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Gain on liquidation of long-term investment	—			—			—			—			—
Equity income in consolidated subsidiaries	104,083			—			—			(104,083		)	—
Management fee income	7,687			—			—			(7,687		)	—
Other, net	1,859			409			1,286			—			3,554
Income before provision for income taxes	11,226			163,318			23,860			(104,083		)	94,321
Income tax benefit (expense)	39,803			(69,450		)	(7,904		)	—			(37,551		)
Net income	51,029			93,868			15,956			(104,083		)	56,770
Net income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Net income attributed to Vector Group Ltd.	51,029			93,868			10,215			(104,083		)	51,029
Comprehensive income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Comprehensive income attributed to Vector Group Ltd.	$	26,357		$	84,073		$	10,215		$	(94,288	)	$	26,357

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2014
	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
Loss on sale of investment securities available for sale	(38		)	—			—			—			(38		)
Equity income from investments	1,462			—			—			—			1,462
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

Schedule of Condensed Cash Flow Statement

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	84,832		$	168,095		$	31,660		$	(144,569	)	$	140,018
Cash flows from investing activities:
Sale of investment securities	146,614			14,415			—			—			161,029
Maturities of investment securities	2,653			—			—			—			2,653
Purchase of investment securities	(156,521		)	(6,324		)	—			—			(162,845		)
Proceeds from sale or liquidation of long-term investments	—			—			182			—			182
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in real estate ventures	—			—			(43,280		)	—			(43,280		)
Distributions from investments in real estate ventures	—			—			11,205			—			11,205
Increase in cash surrender value of life insurance policies	(766		)	(459		)	—			—			(1,225		)
Increase in restricted assets	(2		)	(6,870		)	—			—			(6,872		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Investments in subsidiaries	(53,511		)	—			—			53,511			—
Proceeds from sale of fixed assets	—			3			—			—			3
Capital expenditures	—			(3,305		)	(4,554		)	—			(7,859		)
Repayments of notes receivable	1,106			—			4,000			—			5,106
Pay downs of investment securities	5,743			—			—			—			5,743
Proceeds from sale of preferred securities	—			—			1,000			—			1,000
Investments in real estate held for sale	—			—			(12,512		)	—			(12,512		)
Net cash used in investing activities	(64,684		)	(2,540		)	(48,369		)	53,511			(62,082		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			1,519			—			—			1,519
Deferred financing costs	—			(624		)	—			—			(624		)
Repayments of debt	—			(4,786		)	(182		)	—			(4,968		)
Borrowings under revolver	—			130,691			—			—			130,691
Repayments on revolver	—			(146,655		)	—			—			(146,655		)
Capital contributions received	—			5,633			47,878			(53,511		)	—
Intercompany dividends paid	—			(134,215		)	(10,354		)	144,569			—
Dividends and distributions on common stock	(139,430		)	—			—			—			(139,430		)
Distributions to non-controlling interest	—			—			(564		)	—			(564		)
Proceeds from exercise of Vector options	1,321			—			—			—			1,321
Tax benefit of options exercised	756			—			—			—			756
Net cash (used in) provided by financing activities	(137,353		)	(148,437		)	36,778			91,058			(157,954		)
Net (decrease) increase in cash and cash equivalents	(117,205		)	17,118			20,069			—			(80,018		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	94,546		$	26,842		$	124,959		$	—		$	246,347

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	173,046			—			—			—			173,046
Maturities of investment securities	517			—			—			—			517
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 investments in 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		)
Repayments of notes receivable	35,933			—			—			(35,000		)	933
Pay downs of investment securities	690			—			—			—			690
Proceeds from sale of fixed assets	—			4			—			—			4
Investments in subsidiaries	(49,834		)	—			—			49,834			—
Capital expenditures	(11		)	(15,121		)	(5,614		)	—			(20,746		)
Net cash used in investing activities	(196,905		)	(18,144		)	(30,592		)	49,834			(195,807		)
Cash flows from financing activities:
Proceeds from issuance of debt	408,750			40,168			—			(35,000		)	413,918
Deferred 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

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Schedule of prior period revisions

The revisions are presented in the table below:

	December 31, 2014
	As Previously Reported		Revision			As Revised
Deferred income taxes	$	29,192	$	(29,192	)	$	—
Total current assets	857,846		(29,192		)	828,654
Deferred income taxes	51,129		(51,129		)	—
Total assets	$	1,573,392	$	(80,321	)	$	1,493,071
Deferred income taxes, net	$	57,671	$	(29,192	)	$	28,479
Total current liabilities	270,095		(29,192		)	240,903
Deferred income taxes, net	145,639		(51,129		)	94,510
Total liabilities	1,551,340		(80,321		)	1,471,019
Total stockholders' equity	22,052		—			22,052
Total liabilities and stockholders' equity	$	1,573,392	$	(80,321	)	$	1,493,071

Net income for purposes of determining basic and diluted EPS

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income attributed to Vector Group Ltd.	$	12,205		$	14,879		$	51,029		$	25,384
Expense attributed to participating securities	(360		)	(423		)	(1,510		)	(739		)
Net income attributed to Vector Group Ltd. available to common stockholders	$	11,845		$	14,456		$	49,519		$	24,645

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,
	2015	2014	2015	2014
Weighted-average shares for basic EPS	118,023,224	108,374,350	117,660,001	106,464,835
Plus incremental shares related to stock options and non-vested restricted stock	134,315	120,354	175,097	118,724
Weighted-average shares for diluted EPS	118,157,539	108,494,704	117,835,098	106,583,559

Outstanding shares not included in the computation of diluted EPS

The following were outstanding during the three and nine months ended September 30, 2015 and 2014, 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,
	2015		2014		2015		2014
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		34,229,687		25,186,773		32,820,165
Weighted-average conversion price	$	19.63	$	17.49	$	19.53	$	16.48

Schedule of other income (loss), net

Other income, net consisted of:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
(Loss) gain on warrants	$	(1,282	)	$	991		$	(1,765	)	$	868
Interest and dividend income	1,578			1,476			5,185			3,665
Accretion of interest income from debt discount on notes receivable	5			11			79			87
Gain on long-term investment	137			—			361			—
Out-of-period adjustment	—			—			—			1,231
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—			—			2,335
Provision for loss on real estate held for sale	(229		)	—			(229		)	—
Loss on sale of assets	(75		)	—			(75		)	—
Other expense	(1		)	(12		)	(2		)	(19		)
Other income, net	$	133		$	2,466		$	3,554		$	8,167

Schedule of other current liabilities

Other current liabilities consisted of:

	September 30, 2015		December 31, 2014
Accounts payable	$	11,966	$	10,856
Accrued promotional expenses	20,053		20,191
Accrued excise and payroll taxes payable, net	5,034		23,172
Accrued interest	16,121		28,321
Commissions payable	14,942		9,523
Accrued salary and benefits	17,232		16,009
Other current liabilities	26,455		18,683
Total other current liabilities	$	111,803	$	126,755

Schedule of goodwill and other intangible assets, net

The components of “Goodwill and other intangible assets, net” were as follows:

	September 30, 2015		December 31, 2014
Goodwill	$	70,791	$	70,791
Indefinite life intangibles:
Intangible asset associated with benefit under the MSA	107,511		107,511
Trademark - Douglas Elliman	80,000		80,000
Intangibles with a finite life, net	7,178		11,670
Total goodwill and other intangible assets, net	$	265,480	$	269,972

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Condensed Consolidated Statement of Stockholders' (Deficiency) Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Non-controlling Interest [Member]
Beginning Balance at Dec. 31, 2014	$ 22,052	$ 11,450	$ 0	$ (90,160)	$ 34,540	$ (12,857)	$ 79,079
Beginning Balance (in shares) at Dec. 31, 2014		114,501,014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	56,770			51,029			5,741
Total other comprehensive loss	(24,672)				(24,672)
Comprehensive (loss) income	32,098
Distributions and dividends on common stock	(140,281)		(16,082)	(124,199)
Surrender of shares in connection with restricted stock vesting	2,083	$ 8	2,075
Surrender of shares in connection with restricted stock vesting (in shares)		83,411
Effect of stock dividend	0	$ 584		(584)
Effect of stock dividend (in shares)		5,837,144
Note conversions, net of taxes $367	25,522	$ 223	25,299
Note conversions, net of taxes $367 (in shares)		2,227,552
Cancellation of treasury shares	0		(12,857)			12,857
Exercise of stock options	1,321	$ 10	1,311
Exercise of stock options (in shares)		110,030
Tax benefit of options exercised	756		756
Stock-based compensation	3,648		3,648
Contributions made by non-controlling interest	704						704
Distributions to non-controlling interest	564						564
Ending Balance at Sep. 30, 2015	$ (56,827)	$ 12,259	$ 0	$ (163,914)	$ 9,868	$ 0	$ 84,960
Ending Balance (in shares) at Sep. 30, 2015		122,592,329

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
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	250,000,000
Common stock, shares issued (in shares)	122,592,329	118,646,261
Common stock, shares outstanding (in shares)	122,592,329	114,501,014
Common stock in treasury, shares (in shares)	0	4,415,247

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

The following table summarizes key information related to the Company's pension plans and other postretirement benefits:

	Pension Benefits												Other Postretirement Benefits
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2015			2014			2015			2014
Service cost — benefits earned during the period	$	133		$	131		$	398		$	392		$	2		$	2		$	6		$	7
Interest cost on projected benefit obligation	1,205			1,549			3,803			4,647			93			108			278			323
Expected return on assets	(1,814		)	(2,130		)	(5,627		)	(6,389		)	—			—			—			—
Settlement loss	—			—			1,607			—			—			—			—			—
Amortization of net loss (gain)	254			269			823			806			(24		)	(15		)	(73		)	(45		)
Net (income) expense	$	(222	)	$	(181	)	$	1,004		$	(544	)	$	71		$	95		$	211		$	285

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 09, 2015
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, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		122,592,329

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Restructuring

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

In October 2015, the Company's tobacco segment commenced a restructuring by realigning its sales force and adjusting its business model to more efficiently serve its chain and independent accounts. In connection with the restructuring, the segment's workforce is expected to decline by approximately 95 employees (or approximately 17% of the tobacco segment's workforce).

The following table summarizes estimated restructuring charges and actual amounts expensed for the three and nine months ended September 30, 2015:

	Total Estimated Costs		Amounts expensed through September 30, 2015
Cash Charges
Employee severance and benefits	$	1,094	$	1,094
Lease termination costs	223		—
Other restructuring expenses	207		—
	1,524		1,094
Non-Cash:
Employee pension benefits	4,000		—
Point of Sale inventory impairment	454		454
	4,454		454
Total restructuring expenses	$	5,978	$	1,548

All amounts expensed through September 30, 2015 are included as Restructuring expenses in the Company’s condensed statements of operations and are all attributable to the Company’s Tobacco segment. The Company anticipates that the remaining restructuring expense will be recognized in the fourth quarter of 2015.

Severance and benefits expensed for the three and nine months ended September 30, 2015 relate entirely to a reduction in sales and administrative positions. Non-cash employee pension benefits costs relate to a reduction in manufacturing positions at Liggett’s plant in Mebane, NC.

The Company’s estimates of the restructuring expense and the timing of various events are based on a number of assumptions and actual results may differ materially from these estimates.

The following table presents the changes in the employee severance and benefits liability under the Tobacco segment restructuring plan:

Severance liability at July 1, 2015	$	—
Severance expense	1,094
Severance payments	—
Severance liability at September 30, 2015	$	1,094

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Tobacco	[1]	$ 264,170	$ 264,520	$ 747,145	$ 748,468
Real estate		185,563	153,748	478,841	415,280
E-Cigarettes		201	1,608	881	9,977
Total revenues		449,934	419,876	1,226,867	1,173,725
Cost of sales:
Tobacco	[1]	174,418	189,728	506,315	537,667
Real estate		121,078	96,442	309,306	261,531
E-Cigarettes		421	1,066	1,518	6,357
Total cost of sales		295,917	287,236	817,139	805,555
Operating, selling, administrative and general expenses		79,114	69,431	232,737	200,431
Litigation settlement and judgment expense		3,750	225	5,843	1,725
Restructuring expenses		1,548	0	1,548	0
Operating income		69,605	62,984	169,600	166,014
Other income (expenses):
Interest expense		(32,898)	(44,034)	(96,405)	(123,670)
Change in fair value of derivatives embedded within convertible debt		7,044	7,127	18,760	7,447
Acceleration of interest expense related to debt conversion		0	(994)	0	(5,112)
Equity (loss) income from real estate ventures		(916)	3,258	1,278	3,002
Equity (loss) income from investments		(579)	829	(2,273)	1,462
(Loss) gain on sale of investment securities available for sale		(821)	33	12,018	(38)
Impairment of investment securities available for sale		(12,211)	0	(12,211)	0
Other, net		133	2,466	3,554	8,167
Income before provision for income taxes		29,357	31,669	94,321	57,272
Income tax expense		13,508	11,964	37,551	21,007
Net income		15,849	19,705	56,770	36,265
Net income attributed to non-controlling interest		(3,644)	(4,826)	(5,741)	(10,881)
Net income attributed to Vector Group Ltd.		$ 12,205	$ 14,879	$ 51,029	$ 25,384
Per basic common share:
Net income applicable to common shares attributed to Vector Group Ltd. (in dollars per share)		$ 0.10	$ 0.13	$ 0.42	$ 0.23
Per diluted common share:
Net income applicable to common shares attributed to Vector Group Ltd. (in dollars per share)		0.10	0.13	0.42	0.23
Cash distributions and dividends declared per share (in dollars per share)		$ 0.38	$ 0.36	$ 1.14	$ 1.09

[1] Revenues and cost of sales include excise taxes of $112,773, $115,323, $319,044 and $327,434, respectively.

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Investment Securities Available for Sale

9 Months Ended

Sep. 30, 2015

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, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,524	$	44,623	$	(1,171	)	$	106,976
Mutual funds invested in fixed income securities	54,864		—		—			54,864
Marketable debt securities	126,080		456		—			126,536
Total investment securities available for sale	$	244,468	$	45,079	$	(1,171	)	$	288,376

The components of investment securities available for sale at December 31, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,041	$	92,255	$	(1,104	)	$	154,192
Mutual funds invested in fixed income securities	61,485		—		(1,659		)	59,826
Marketable debt securities	130,311		2,630		(916		)	132,025
Total investment securities available for sale	$	254,837	$	94,885	$	(3,679	)	$	346,043

The table below summarizes the maturity dates of marketable debt securities at September 30, 2015.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	35,433	$	—	$	35,433	$	—
Corporate securities	54,741		6,917		47,565		259
U.S. mortgage-backed securities	6,351		1,061		5,132		158
Commercial mortgage-backed securities	14,537		6,632		1,793		6,112
U.S. asset-backed securities	13,360		2,342		10,343		675
Index-linked U.S. bonds	2,114		—		2,114		—
Total marketable debt securities by maturity dates	$	126,536	$	16,952	$	102,380	$	7,204

The available-for-sale investment securities with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:

	In loss position for
	Less than 12 months					12 months or more
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Total Fair Value		Total Unrealized Losses
September 30, 2015
Marketable equity securities	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
December 31, 2014
Marketable equity securities	$	6,599	$	(138	)	$	3,534	$	(966	)	$	10,133	$	(1,104	)
Mutual funds invested in fixed income securities	59,826		(1,659		)	—		—			59,826		(1,659		)
Marketable debt securities
U.S. Government securities	22,375		(18		)	—		—			22,375		(18		)
Corporate securities	30,896		(204		)	7,224		(131		)	38,120		(335		)
U.S. mortgage-backed securities	3,370		(26		)	—		—			3,370		(26		)
Commercial mortgage-backed securities	11,332		(46		)	5,176		(432		)	16,508		(478		)
U.S. asset-backed securities	15,228		(29		)	—		—			15,228		(29		)
Index-linked U.S. bonds	2,098		(30		)	—		—			2,098		(30		)
	$	151,724	$	(2,150	)	$	15,934	$	(1,529	)	$	167,658	$	(3,679	)

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses

from equity and debt securities are due to market price movements. The Company believes the unrealized losses associated with the Company's equity securities will be recovered in the future.

Gross realized gains and losses on available-for-sale investment securities were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Gross realized gains on sales	$	129		$	100		$	13,601		$	151
Gross realized losses on sales	(950		)	(67		)	(1,583		)	(189		)
(Loss) gain on sale of investment securities available for sale	$	(821	)	$	33		$	12,018		$	(38	)
Gross realized losses on other-than-temporary impairments	$	(12,211	)	$	—		$	(12,211	)	$	—

The Company recorded an “Other-than-temporary-impairment” charge of $12,211 during the three and nine months ended September 30, 2015.  The largest component of this charge was $6,895 related to Morgans Hotel Group Co., a company where Vector's President and Chief Executive Officer also serves as Chairman of the Board of Directors.

Although management generally does not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing the Company's investment securities portfolio, management may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders.

Proceeds from investment securities sales totaled $42,768 and $124,342 and proceeds from early redemptions by issuers totaled $3,130 and $615 in the three months ended September 30, 2015 and 2014, respectively, mainly from sales of Corporate securities and U.S. Government securities.

Proceeds from investment securities sales totaled $161,029 and $173,046 and proceeds from early redemptions by issuers totaled $8,397 and $1,207 in the nine months ended September 30, 2015 and 2014, respectively, mainly from sales of Corporate securities and U.S. Government securities.

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Inventories

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories consist of:

	September 30, 2015			December 31, 2014
Leaf tobacco	$	50,672		$	49,948
Other raw materials	4,184			3,532
Work-in-process	624			879
Finished goods	66,266			62,876
E-Cigarettes	106			3,079
Inventories at current cost	121,852			120,314
LIFO adjustments	(31,157		)	(29,991		)
	$	90,695		$	90,323

All of the Company's inventories at September 30, 2015 and December 31, 2014 are reported under the LIFO method. The $31,157 LIFO adjustment as of September 30, 2015 decreases the current cost of inventories by $20,321 for Leaf tobacco, $900 for Other raw materials, $41 for Work-in-Process, $9,887 for Finished goods and $8 for E-Cigarettes. The $29,991 LIFO adjustment as of December 31, 2014 decreased the current cost of inventories by $19,941 for Leaf tobacco, $861 for Other raw materials, $39 for Work-in-Process, $9,054 for Finished goods and $96 for E-Cigarettes.

Liggett enters into purchase commitments for leaf tobacco that will be used entirely for future production. The future quantities of leaf tobacco and prices are established at the date of the commitments. At September 30, 2015, Liggett had tobacco purchase commitments of approximately $14,796. Liggett has a single source supply agreement for fire safe cigarette paper through 2019.

The Company capitalizes the incremental prepaid cost of the MSA in ending inventory. Each year, the Company capitalizes in inventory that portion of its MSA liability that relates to cigarettes shipped to public warehouses but not sold. The amount of capitalized MSA cost in “Finished goods” inventory was $15,906 and $14,369 at September 30, 2015 and December 31, 2014, respectively.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

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 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 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 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.

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 and E-Cigarettes 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 fixed or 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 includes federal excise taxes on tobacco sales in revenues and cost of goods sold. Since the Company’s primary 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 only 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 commissions earned by the Company’s real estate 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 expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

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 29, 2015. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

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. 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, 2015, the range of estimated fair market values of the Company's embedded derivatives was between $148,769 and $150,125. The Company recorded the fair market value of its embedded derivatives at the approximate midpoint of the range at $149,739 as of September 30, 2015. At December 31, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $167,593 and $171,215. The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $169,386 as of December 31, 2014. The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

Investment in Real Estate Ventures

Investment in Real Estate Ventures:

The Company's interest in Variable Interest Entities ("VIE") is primarily in the form of equity ownership. The Company examines specific criteria and uses judgment when determining if the Company is the primary beneficiary of a VIE. Factors considered include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's executive committee, existence of unilateral kick-out rights exclusive of protective rights or voting rights and level of economic disproportionality between the Company and its other partner(s).

Accounting guidance requires the consolidation of VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company's maximum exposure to loss in its investments in unconsolidated VIEs is limited to its investment in the unconsolidated VIEs which is the carrying value. The Company's maximum exposure to loss in its investment in its consolidated VIEs is limited to its investment which is the carrying value of the investment net of the non-controlling interest. Creditors of the consolidated VIEs have no recourse to the general credit of the primary beneficiary.

New Accounting Pronouncements

New Accounting Pronouncements:

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-16, Business Combination (Topic 805): Simplifying the Accounting for Measurement Period Adjustments (“ASU 2015-16”), which requires adjustments to provisional amounts initially recorded in a business combination that are identified during the measurement period to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU 2015-15 also requires the disclosure of the nature and amount of measurement-period adjustments recognized in the current period, including separately the amounts in current-period income statement line items that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance is effective for the Company beginning January 1, 2016. The Company will apply the guidance prospectively for all business combinations that occur subsequent to the adoption date.

In August 2015, FASB issued ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measure of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting), which codifies an Securities and Exchange Commission staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangement as assets. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 clarifies that the Securities and Exchange Commission staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This guidance is effective immediately and will be applied prospectively to any line-of-credit arrangements entered into subsequent to the effective date.

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Company will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for the Company beginning January 1, 2016. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. ASU 2015-02 requires management to reevaluate all legal entities under a revised consolidation model specifically (1) modify the evaluation of whether limited partnership and similar legal entities are Variable Interest Entities (“VIEs”), (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In May 2014, FASB issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), (“ASU 2014-9”). ASU 2014-9 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As amended by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date the new standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted for annual reporting periods beginning subsequent to December 15, 2016. The new standard is required to be applied retrospectively to each prior reporting period presented or with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method and it has not determined the impact of the new standard on its consolidated financial statements.

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Income Taxes

9 Months Ended

Sep. 30, 2015

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,
	2015		2014			2015		2014
Income before provision for income taxes	$	29,357	$	31,669		$	94,321	$	57,272
Income tax expense using estimated annual effective income tax rate	11,557		9,932			37,238		17,962
Changes in effective tax rates	1,539		(374		)	—		—
Impact of discrete items, net	412		1,305			313		1,944
Inclusion of tax liabilities from unincorporated entities	—		1,101			—		1,101
Income tax expense	$	13,508	$	11,964		$	37,551	$	21,007

The discrete item for the nine months ended September 30, 2015 is primarily related to a change in the marginal state tax rate as a result of recent state legislations changes, the rate differential in other comprehensive income and the results of recent state income tax audits.

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.

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Notes Payable, Long Term Debt and Other Obligations

9 Months Ended

Sep. 30, 2015

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, 2015			December 31, 2014
Vector:
7.75% Senior Secured Notes due 2021, including premium of $8,337 and $9,275	$	608,337		$	609,275
6.75% Variable Interest Senior Convertible Note due 2015	—			25,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $136,365 and $146,634*	93,635			83,366
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $89,454 and $98,831*	169,296			159,919
Liggett:
Revolving credit facility	1,803			17,767
Term loan under credit facility	3,368			3,589
Equipment loans	10,919			13,966
Other	289			469
Total notes payable, long-term debt and other obligations	887,647			913,351
Less:
Current maturities	(7,957		)	(52,640		)
Amount due after one year	$	879,690		$	860,711

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Senior Convertible Note ($0 at September 30, 2015 and $884 at December 31, 2014, respectively), the 7.5% Variable Interest Senior Convertible Notes ($75,788 at September 30, 2015 and $87,638 at December 31, 2014, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($73,951 at September 30, 2015 and $80,864 at December 31, 2014, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

6.75% Variable Interest Senior Convertible Note due 2015 - Vector:

On February 3, 2015, the holder of the 6.75% Variable Interest Senior Convertible Note due 2015, converted the remaining $25,000 principal balance of the $50,000 Note into 2,338,930 of the Company's common shares. The debt conversion resulted in a reduction of debt and an increase to equity in the amount of $25,000.

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

As of September 30, 2015, a total of $5,171 was outstanding under the revolving and term loan portions of the credit facility. Availability, as determined under the facility, was approximately $52,915 based on eligible collateral at September 30, 2015.

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

The conversion rates for all convertible debt outstanding as of September 30, 2015 and December 31, 2014, are summarized below:

	September 30, 2015			December 31, 2014
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
6.75% Variable Interest Senior Convertible Note due 2014	$	—	—	$	10.69	93.5572
7.5% Variable Interest Senior Convertible Notes due 2019	$	15.98	62.5743	$	15.98	62.5743
5.5% Variable Interest Senior Convertible Debentures due 2020	$	24.64	40.5891	$	24.64	40.5891

Non-Cash Interest Expense - Vector:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Amortization of debt discount, net	$	6,868	$	14,277	$	18,708	$	41,180
Amortization of deferred finance costs	1,085		1,147		3,073		2,910
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
	$	7,953	$	16,418	$	21,781	$	49,202

Fair Value of Notes Payable and Long-Term Debt:

	September 30, 2015					December 31, 2014
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	887,647	(1)	$	1,285,711	$	913,351	(1)	$	1,313,711

______________________

⁽¹⁾ The carrying value does not include the carrying value of the embedded derivative. See Note 11.

Notes payable and long-term debt are carried on the condensed consolidated balance sheet at amortized cost. The fair value determinations disclosed above are classified as Level 2 under the fair value hierarchy disclosed in Note 11 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 is not necessarily indicative of the amount that could be realized in a current market exchange.

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 13, 2013
Income Tax Contingency [Line Items]
Income before provision for income taxes	$ 29,357	$ 31,669	$ 94,321	$ 57,272
Income tax expense using estimated annual effective income tax rate	11,557	9,932	37,238	17,962
Changes in effective tax rates	1,539	(374)	0	0
Impact of discrete items, net	412	1,305	313	1,944
Inclusion of tax liabilities from unincorporated entities	0	1,101	0	1,101
Income tax expense	$ 13,508	$ 11,964	$ 37,551	21,007
Other Comprehensive Income [Member]
Income Tax Contingency [Line Items]
Impact of discrete items, net				440
Additional Paid-in Capital [Member]
Income Tax Contingency [Line Items]
Impact of discrete items, net				865
Income Tax Expense [Member]
Income Tax Contingency [Line Items]
Impact of discrete items, net				$ 639
New Valley LLC [Member] | Douglas Elliman Realty LLC [Member]
Income Tax Contingency [Line Items]
Percent of interest acquired					20.59%

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Long Term Investments

9 Months Ended

Sep. 30, 2015

Long-term Investments [Abstract]

Long-Term Investments

LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

	September 30, 2015		December 31, 2014
Investments accounted at cost	$	42,056	$	32,239
Investments accounted under the equity method	11,592		8,053
	$	53,648	$	40,292

Long-term investments accounted for at cost are summarized as follows:

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Long-term investments	$	41,541	$	46,435	$	31,541	$	38,039
Real estate partnership	515		587		698		1,108
	$	42,056	$	47,022	$	32,239	$	39,147

The Company accounts for investments which it has significant influence under the equity method. The Company recorded an equity loss of $579 and equity income of $829 for the three months ended September 30, 2015 and September 30, 2014, respectively. The Company recorded an equity loss of $2,273 and equity income of $1,462 for the nine months ended September 30, 2015 and September 30, 2014, respectively. The fair value of the investments in investment companies accounted for under the equity method was approximately $11,592 and $8,053 as of September 30, 2015 and December 31, 2014.

The Company's investments under the equity method contains an investment in the common stock of Boyar Value Fund ("Boyar"). As of September 30, 2015, the Company owned approximately 30% of the outstanding stock of Boyar. The carrying value of the investment based on the quoted market price as of September 30, 2015 was $6,984. Ladenburg Thalmann Fund Management, LLC, an indirect subsidiary of Ladenburg Thalmann Financial Services Inc. is the manager of Boyar.

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New Valley LLC

9 Months Ended

Sep. 30, 2015

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.The Company owns a 70.59% interest in Douglas Elliman and the condensed consolidated financial statements of the Company include the account balances of Douglas Elliman.

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, 2015		December 31, 2014
Milanosesto Holdings (Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037
10 Madison Square Park West (1107 Broadway)	9,522		6,383
The Marquand	13,900		12,000
11 Beach Street	11,928		12,328
20 Times Square (701 Seventh Avenue)	13,095		12,481
111 Murray Street	16,114		27,319
357 West (160 Leroy Street)	1,950		1,467
PUBLIC Chrystie House (Chrystie Street)	5,297		3,300
The Dutch (25-19 43rd Avenue)	980		733
Queens Plaza (23-10 Queens Plaza South)	14,732		11,082
87 Park (8701 Collins Avenue)	5,654		6,144
125 Greenwich Street	11,193		9,308
West Hollywood Edition (9040 Sunset Boulevard)	5,604		5,604
76 Eleventh Avenue	17,000		—
Monad Terrace	6,438		—
Condominium and Mixed Use Development	133,407		108,149
Maryland Portfolio	1,377		3,234
ST Portfolio	16,881		15,283
Apartment Buildings	18,258		18,517
Park Lane Hotel	19,373		19,341
Hotel Taiwana	7,337		7,629
Coral Beach and Tennis Club	3,023		2,816
Hotels	29,733		29,786
The Plaza at Harmon Meadow	5,638		—
Commercial	5,638		—
Other	1,979		1,971
Investments in real estate ventures	$	194,052	$	163,460

Condominium and Mixed-Use Development:

Condominium and mixed-use development investments range in ownership percentage from 5% to 49.5%. New Valley recorded net equity income of $248 and $923 for the three and nine months ended September 30, 2015, respectively. The $923 equity income for the nine months ended September 30, 2015 was primarily related to New Valley's proportionate share of the Marquand’s equity earnings from the sale of five units offset by equity losses from the other condominiums and mixed-use development projects. New Valley recorded equity income of $5,090 and $7,389 for the three and nine months ended September 30, 2014, respectively. The Company recorded $5,000 of equity income related to its proportionate share of the Marquand’s equity earnings from the sale of approximately 40% of its units during the quarter and $2,254 of equity income primarily related to the sale of a commercial unit at 10 Madison Square Park West for the nine months ended September 30, 2014.

During the nine months ended September 30, 2015, New Valley made capital contributions totaling $35,776 related to ventures where New Valley previously held an investment, primarily at 10 Madison Square Park West, Queens Plaza and 125 Greenwich Street, and the new ventures 76 Eleventh Avenue and Monad Terrace. For ventures where New Valley previously held an investment, New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's direct investment percentage did not change. During the nine months ended September 30, 2014, New Valley made capital contributions totaling $27,225 primarily related to 111 Murray Street, Queens Plaza and 125 Greenwich Street. New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's investment percentages did not change.

In May 2015, New Valley purchased a 5.1% interest in 76 Eleventh Avenue for $17,000. The joint venture related to 76 Eleventh Avenue is a variable interest entity, however, New Valley is not the primary beneficiary. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in 76 Eleventh Avenue as of September 30, 2015 is $17,000.

In May and June 2015, New Valley purchased a 31.3% interest in Monad Terrace for $6,200. The joint venture related to Monad Terrace is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in Monad Terrace as of September 30, 2015 is $6,438.

During the nine months ended September 30, 2015, New Valley received distributions of $11,441 primarily related to a return of capital from 111 Murray Street. The return of capital primarily resulted from the admittance of a new limited partner in 111 Murray Street. The admittance of the new limited partner reduced New Valley's interest in the overall joint venture from 25% to 9.5%. New Valley recognized equity income of $344 as a result of the transaction, offsetting the equity loss of $344 recognized during the year. During the nine months ended September 30, 2014, New Valley received distributions of $4,547 primarily related to 10 Madison Square Park West, 125 Greenwich Street, 11 Beach Street and 20 Times Square.

New Valley's maximum exposure to loss, net of non-controlling interest, as a result of its investments in condominium and mixed-use developments was $130,027 at September 30, 2015.

Apartment Buildings:

Apartment building investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded an equity loss of $72 for the three months ended September 30, 2015 and equity income of $1,730 for the nine months ended September 30, 2015, respectively, primarily related to the ST Portfolio apartment portfolio. In 2015, ST Portfolio sold one (Phoenix, Arizona) of its three remaining Class A multi-family buildings and the proceeds were used to retire debt. New Valley recorded equity losses of $87 and $251 for the three and nine months ended September 30, 2014, respectively, primarily related to equity losses of ST Portfolio. New Valley received distributions of $1,989 and $375 during the nine months ended September 30, 2015 and 2014, respectively, primarily related to NV Maryland. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $18,258 at September 30, 2015.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. New Valley recorded equity losses of $1,323 and $2,330 for the three and nine months ended September 30, 2015, respectively, related to hotel operations. New Valley recorded equity losses of $2,053 and $4,222 for the three and nine months ended September 30, 2014, respectively. New Valley made capital contributions totaling $2,277 for the nine months ended September 30, 2015, primarily related to Coral Beach and Tennis Club and Park Lane Hotel. New Valley made capital contributions totaling $1,973 for the nine months ended September 30, 2014, primarily related to Coral Beach. New Valley's maximum exposure to loss as a result of its investments in hotels was $29,733 at September 30, 2015.

Commercial:

Commercial ventures include a contribution by New Valley of $5,931 for a 49% interest in a joint venture which purchased a shopping center, The Plaza at Harmon Meadow, in New Jersey at the end of March 2015. The joint venture is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley will account for its interest in the joint venture under the equity method of accounting. New Valley recorded equity income of $20 and $47 for the three and nine months ended September 30, 2015 related to shopping center rental operations. New Valley received distributions totaling $340 for the nine months ended September 30, 2015, related to Harmon Meadow. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $5,638 at September 30, 2015.

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, 2015		December 31, 2014
Escena, net	$	10,451	$	10,643
Sagaponack	12,512		—
Real estate held for sale, net	$	22,963	$	10,643

Escena.  The assets of “Escena, net” are as follows:

	September 30, 2015			December 31, 2014
Land and land improvements	$	8,902		$	8,953
Building and building improvements	1,873			1,865
Other	1,596			1,568
	12,371			12,386
Less accumulated depreciation	(1,920		)	(1,743		)
	$	10,451		$	10,643

New Valley recorded operating losses of $779 and $804 for the three months ended September 30, 2015 and 2014, respectively, from Escena. New Valley recorded operating losses of $227 and $571 for the nine months ended September 30, 2015 and 2014, 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.

Investment in Sagaponack. In April 2015, New Valley has invested $12,502 in a residential real estate project located in Sagaponack, NY. The project is wholly owned and the balances of the project are included in the consolidated financial statements of the Company. As of September 30, 2015, the assets of Sagaponack consist of land and land improvements of $12,512.

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Contingencies

9 Months Ended

Sep. 30, 2015

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 three months ended September 30, 2015 and 2014, Liggett incurred tobacco product liability legal expenses and costs totaling $5,355 and $2,108. For the nine months ended September 30, 2015 and 2014, Liggett incurred tobacco product liability legal expenses and costs totaling $11,068 and $7,282. These costs are included in the operating, selling, administrative and general expenses and litigation settlement and judgment expense line items in the Condensed Consolidated Statements of Operations.

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 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 $12,268 in bonds as of September 30, 2015.

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 challenged the constitutionality of the bond cap statute, but to date the courts 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 September 30, 2015, 23Engle progeny cases where Liggett was a defendant at trial resulted in verdicts. Fifteen verdicts were returned in favor of the plaintiffs (although in two of these cases (Irimi and Cohen), the court granted defendants' motion for a new trial and another (Putney) was reversed on appeal) and eight in favor of Liggett. In certain cases, the judgments were entered jointly and severally with other defendants and Liggett may face the risk that one or more co-defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated share of a judgment. As a result, Liggett under certain circumstances may have to pay more than their proportionate share of any bonding or judgment related amounts. In four of the cases, punitive damages were awarded against Liggett. Several of the judgments remain on appeal. 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, 2015, Liggett (and in certain cases the Company) had, on an individual basis, settled 168Engle progeny cases for approximately $3,546 in the aggregate. Five of those settlements occurred in the third quarter of 2015. 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, 2015, there were 55 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 approximately 285 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:

State	Number of Cases
Florida	29
Maryland	12
New York	8
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 sued 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. In October 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, starting in February 2015. In exchange, the claims of over 4,900 plaintiffs were dismissed with prejudice against the Company and Liggett. Due to the settlement, in 2013 the Company recorded a charge of $86,213, of which $25,213 is related to certain payments discounted to their present value using an 11% annual discount rate. The Company recorded an additional charge of $643 in the first quarter of 2015 for additional cases joining the settlement and the restructuring of certain payments related to several previously settled cases. The installment payments total approximately $48,000 on an undiscounted basis. The Company’s future payments will be approximately $3,400 per annum through 2028, with a cost of living increase beginning in 2021.

Notwithstanding the comprehensive nature of the Engle Progeny Settlement, approximately 285 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 September 30, 2015, the following Engle progeny cases have resulted in judgments against Liggett:

Date	Case Name	County	Liggett Compensatory Damages (as adjusted) (1)	Liggett Punitive Damages	Status (2)
June 2002	Lukacs v. R.J. Reynolds	Miami-Dade	$12,418	$—	Liggett satisfied the judgment and the case is concluded.
August 2009	Campbell v. R.J. Reynolds	Escambia	156	—	Liggett satisfied the judgment and the case is concluded.
March 2010	Douglas v. R.J. Reynolds	Hillsborough	1,350	—	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	—	On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings regarding the amount of the award. Plaintiff filed a motion for rehearing which was denied. Both sides sought discretionary review from the Florida Supreme Court. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
April 2011	Tullo v. R.J. Reynolds	Palm Beach	225	—	Liggett satisfied the judgment and other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett, the case is concluded.
January 2012	Ward v. R.J. Reynolds	Escambia	1	—	Liggett satisfied the 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. Oral argument occurred on June 16, 2015.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. The court refused to reduce the award by decedent's comparative fault. Judgment was 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. On September 28, 2015, the Florida Supreme Court directed the parties to brief the existence of its jurisdiction in light of the outcome of the Hess appeal.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	205	—	Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal. Defendants cross-appealed.
August 2013	Rizzuto v. R.J. Reynolds	Hernando	3,479	—	Liggett settled its portion of the judgment for $1,500 and the case is concluded as to Liggett.
August 2014	Irimi v. R.J. Reynolds	Broward	31	—	In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed to the Fourth District Court of Appeal.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	A final judgment was entered against Liggett for $13,100. Liggett was the only defendant at trial. On appeal to the Second District Court of Appeal. The parties reached an agreement regarding the amount of plaintiff's trial level attorneys' fees and costs in the event plaintiff prevails on appeal.
November 2014	Boatright v. R.J. Reynolds	Polk	—	300	In November 2014, the jury awarded compensatory damages in the amount of $15,000 with 15% fault apportioned to plaintiff and 85% to Philip Morris.  The jury further assessed punitive damages against Philip Morris for $19,700 and Liggett for $300.  Post-trial motions were denied. A joint and several judgment was entered in the amount of $12,750 on the compensatory damages. Judgment was further entered against Liggett for $300 in punitive damages. On appeal to the Second District Court of Appeal.
June 2015	Caprio v. R.J. Reynolds	Broward	28	0	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  On appeal to the Fourth District Court of Appeal.
Total Damages Awarded:			29,547	18,400
Amounts paid or compromised:			(17,978)	(1,000)
Damages remaining on Appeal:			$11,569	$17,400
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault. The amounts listed above do not include attorneys' fees or statutory interest.
(2) See Exhibit 99.1 for a more complete description of the cases currently on appeal.

Through September 30, 2015, Liggett paid $20,312, including interest and legal fees, to satisfy the judgments in sevenEngle progeny cases (Lukacs, Campbell, Douglas, Clay,Tullo, Ward and Rizzuto).

The Company’s potential range of loss in the Putney, Calloway, Cohen, Irimi, Lambert, Boatright and Caprio cases is between $0 and $26,219 in the aggregate, plus 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 $4,146 for Buchanan, accrued by Liggett in the third quarter 2015, no amounts have been expensed or accrued in the 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 Judgments. In December 2010, in the Martin case, a state court case against R.J. Reynolds, the First District Court of Appeal 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 findings. 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. The Martin decision has led to additional 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. To date, the United States Supreme Court has declined to review any Engle progeny decisions.

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 Engle progeny claim for a fraud committed before May 5, 1982 is barred. In April 2015, the Florida Supreme Court reversed the Fourth District Court of Appeal decision and reinstated the jury verdict. The Florida Supreme Court held that Engle defendants cannot raise a statute of repose defense to claims for concealment or conspiracy. Defendants' motion for rehearing was denied.

In April 2015, in Graham v. R.J. Reynolds Tobacco Co., the Eleventh Circuit held that federal law impliedly preempts use of the res judicataEngle findings to establish claims for strict liability or negligence. The plaintiff moved for rehearing.

Maryland Cases

Liggett is currently a defendant in 12 multi-defendant personal injury cases in Maryland that allege claims arising from asbestos and tobacco exposure.  Liggett along with other tobacco defendants have moved (or are in the process of moving) to dismiss the cases.  In the past, motions to dismiss have generally been successful, typically resulting in the dismissal without prejudice of the tobacco company defendants, including Liggett.  Recently, however, a Maryland intermediate appellate court ruled, in Stidham, et al. v. R. J. Reynolds Tobacco Company, et al., that dismissal of tobacco company defendants may not be appropriate where injury is asserted based on both asbestos and tobacco usage. Although Stidham is subject to further appellate review, and the scope of its holding is not yet known, it is possible that Liggett and other tobacco company defendants will not be dismissed from pending synergy exposure cases, and may be named as a defendant in asbestos-related personal injury actions in Maryland going forward, including approximately 20 additional synergy exposure cases currently pending in Maryland state court.

Liggett Only Cases.  There are currently three cases pending where Liggett is the only remaining defendant. Each of these cases is an Individual Action. 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, affirmed on appeal and remanded to the trial court for further proceedings. A status conference is scheduled for November 13, 2015. There has been no further activity in the other two Individual Actions. Cases where Liggett is the only defendant could increase as a result of the remaining Engle progeny cases.

Class Actions

As of September 30, 2015, three actions were pending for which either a class had been certified or plaintiffs were seeking class certification where Liggett is a named defendant. 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 2013, plaintiffs’ filed a motion to stay the case and that motion was granted.

In February 1998, in Parsons v. AC & S Inc., a purported class action 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 action was commenced against cigarette manufacturers alleging they conspired to fix cigarette prices in violation of antitrust laws. Plaintiffs sought to recover an unspecified amount in actual and punitive damages. Class certification was granted in November 2001. In March 2012, the court granted the defendants' motions for summary judgment and dismissed plaintiffs’ claims with prejudice. In July 2014, the court of appeals affirmed the lower court’s decision. In August 2014, plaintiffs sought review by the Kansas Supreme Court, which the court denied in June 2015, thereby concluding this litigation.

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. 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. The issue of damages was reserved for further proceedings. The court entered judgment in October 2013, dismissing all claims except the ventilated filter claim. The judgment was affirmed on appeal and remanded to the trial court for further proceedings. In April 2015, the plaintiffs filed a petition for writ of certiorari to the United States Supreme Court which subsequently declined review. In July 2015, the trial court ruled on the scope of the ventilated filter claim and determined that only 30 plaintiffs have potentially viable claims against the non-Liggett defendants, which may be pursued in a second phase of the trial. The court intends to try the claims of these plaintiffs in six consolidated trials, each with five plaintiffs. The trial court set the first two dates for the consolidated trials for June 13, 2016 and December 4, 2016. With respect to Liggett, the trial court requested that Liggett and plaintiffs brief whether any claims against Liggett survive given the outcome of the first phase of the trial.  Briefing of that issue is underway. If the case proceeds against Liggett, it is estimated that Liggett could be a defendant in less than 25 of the remaining individual cases.

In addition to the cases described above, numerous class actions remain certified against other cigarette manufacturers including cases alleging, among other things, that use of the terms “lights” and “ultra lights” constitutes unfair and deceptive trade practices. 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, 2015, one Health Care Cost Recovery Action was 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, but can 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. Although no specific damage amounts are typically pleaded, 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.

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 appealed 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, 2015, there were nineEngle progeny cases scheduled for trial through September 30, 2016, where Liggett (and/or the Company) is a named defendant. Trial dates are, however, subject to change. In Shulman, an Engle progeny case, trial commenced October 16, 2015.

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 3.4% of the total cigarettes sold in the United States in 2014. 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, 2014, Liggett and Vector Tobacco pre-paid $100,000 of their approximate $117,800 2014 MSA obligation. Liggett and Vector Tobacco paid the remaining $17,800 on April 15, 2015.

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 Participating Manufacturers' loss of market share to non-participating manufacturers for 2003. Under the MSA, such a “significant factor” determination results in the calculation of a reduction in the payment obligations of the Participating Manufacturers, which is known as the “NPM Adjustment.” The economic consulting firm subsequently made the same determination with respect to 2004 and 2005. In March 2009, a different economic consulting firm made the same determination for 2006. As a result, the Participating 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 - 2014 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 Participating Manufacturers for the benefit of that Settling State.

For 2003 - 2014, Liggett and Vector Tobacco, as applicable, disputed that they owed the Settling States the NPM Adjustments as calculated by the independent auditor. As permitted by the MSA, Liggett and Vector Tobacco 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. Under the MSA, the independent auditor previously determined the NPM Adjustment for 2003 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 shares of the Settling States, entered into an agreement providing for the nationwide arbitration of the dispute with respect to the NPM Adjustment for 2003, as ordered by the various state courts. In exchange, the Participating Manufacturers 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 MSA payments for 2012, due April 2013. In May 2013, two additional states joined the settlement and in June 2014, another two states joined the settlement.Several non-settling states filed motions in state courts attempting to vacate the settlement award. Although certain terms of the settlement were implemented by the independent auditor in April 2013, no assurance can be given as to the ultimate outcome of the non-settling states’ challenges. The parties have been working towards converting the term sheet into a final settlement agreement. As a result of the settlement, in the first nine months of 2013, Liggett reduced cost of sales by $6,947. Liggett received credits of $1,733 in April 2014 from these settling states related to the 2013 NPM Adjustment. Liggett received additional credits of $1,940 in April 2015 related to the 2014 NPM Adjustment.

In September 2013, the panel issued its decisions with respect to the 15 states that did not enter into the term sheet and as to which the Participating Manufacturers contested diligence. The panel found that six of these states did not diligently enforce their MSA escrow statutes in 2003. As a result of this ruling, Liggett reduced cost of sales by $5,987, 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. Before the MSA payments for 2013 were due, the Pennsylvania trial court 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). Liggett 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 to which Liggett believes it is entitled. After the April 2014 MSA payment date, a state trial court in Missouri issued a ruling similar to the ruling in Pennsylvania. As such, Liggett’s 2003 NPM Adjustment credit could be reduced by an additional $521. After the April 2014 MSA payment date, a state trial court in Maryland reached a different result from the Pennsylvania and Missouri trial courts, denying the state’s motion to vacate the award and further denying its motion to reduce the amount of the award payable to Liggett. A New Mexico trial court has not yet ruled on New Mexico’s motion. In June 2014, Kentucky and Indiana agreed to settle the dispute and join the term sheet described above. As a result, Liggett reduced cost of sales by approximately $1,400 in the second quarter of 2014. The Participating Manufacturers, including Liggett, appealed the Pennsylvania and Missouri decisions, while Maryland appealed the Maryland decision. In April 2015, the Pennsylvania decision was affirmed by the appellate court. The Participating Manufacturers have asked the Pennsylvania Supreme Court to grant discretionary review of that decision. In September 2015, the portion of the Missouri opinion that reduced the arbitration award was reversed by the appellate court. It is likely that the State will ask the Missouri Supreme Court to grant a discretionary appeal of that decision. In October 2015, the portion of the Maryland trial court ruling that denied reduction of the arbitration award was reversed by the appellate court. It is likely that the Participating Manufacturers will ask the Maryland Court of Appeals (Maryland’s highest court) to grant a discretionary review of that decision.If Liggett is unsuccessful in its appeals or if other states are successful with respect to any such appeals or 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 might be obligated to pay additional monies.

In October 2015, substantially all of the Participating Manufacturers settled the NPM Adjustment dispute with the state of New York for 2004 - 2014 and agreed to a mechanism for potential future credits against the Participating Manufacturers' MSA payments for 2015 forward. As a result of the settlement, Liggett reduced cost of sales by approximately $5,700 for the three and nine months ended September 30, 2015.

The remaining NPM Adjustment accrual of approximately $20,000 at September 30, 2015 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. Following release of previously disputed amounts to the state of New York as part of the October 2015 settlement, it is anticipated there will be approximately $23,000 remaining in the disputed payments accounts relating to Liggett's 2011- 2014 NPM Adjustment disputes with the non-settling states.

    Disputes over the NPM Adjustments for 2004-2014 remain to be arbitrated with the states that have not joined the settlement. Liggett is currently involved in litigation in 20 states over the scope and form of the arbitration for 2004. Further adjustments could also be due to Liggett and Vector Tobacco under the settlement with 24 states for 2013 forward.

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

In December 2012, the parties arbitrated the dispute. In February 2013, the arbitrators ruled that the independent auditor was precluded from recalculating Liggett’s grandfathered market share (“GFMS”) exemption. The arbitrators further ruled that, for purposes of calculating Liggett’s payment obligations, 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 opposed Liggett’s motion.

In October 2014, the panel issued a Corrected Final Award that eliminated the 1.25% adjustment increase. The panel further determined that the independent auditor shall compute Liggett’s market share for all years after 2000 on a “net” basis, but adjust that computation to approximate “gross” market share by using actual returned product data for each year. In July 2015, the independent auditor issued calculations, purportedly based on the Corrected Final Award, which indicated that Liggett owes approximately $16,000 for years 2001 - 2013. Liggett contends that the independent auditor's calculations are not consistent with the Corrected Final Award and has disputed same. Liggett's accrual for this matter was $8,500 at September 30, 2015.

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 were 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. The Attorneys General for Florida, Mississippi and Texas previously advised Liggett that they believed that Liggett had failed to make payments under the respective settlement agreements with those states. In 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, with the payments from year 12 forward being subject to an inflation adjustment. These payments are in lieu of any other payments allegedly due to Florida. In 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 multiple Engle progeny cases and 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, 2015 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, 2015	$	26,322		$	3,149		$	29,471		$	25,809		$	25,700		$	51,509
Expenses	83,236			6,371			89,607			—			(195		)	(195		)
NPM Settlement adjustment	—			—			—			(5,715		)	—			(5,715		)
Change in MSA obligations capitalized as inventory	1,536			—			1,536			—			—			—
Payments	(18,142		)	(5,851		)	(23,993		)	—			—			—
Reclassification from non-current liabilities	—			3,305			3,305			—			(3,305		)	(3,305		)
Interest on withholding	—			666			666			—			1,872			1,872
Balance as of September 30, 2015	$	92,952		$	7,640		$	100,592		$	20,094		$	24,072		$	44,166

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

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 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. Liggett previously 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 Liggett Vector Brands' obligation under the agreement was immaterial at September 30, 2015.

There are several other proceedings, lawsuits and claims pending against the Company or one or more of its consolidated subsidiaries unrelated to tobacco or tobacco product liability. For instance, Douglas Elliman is subject to various types of litigation in the ordinary course of its business. 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.

XML

Condensed Consolidating Financial Information (Narrative) (Details) $ in Thousands	1 Months Ended
	Feb. 28, 2013 USD ($)	Sep. 30, 2015
Condensed Financial Statements, Captions [Line Items]
Subsidiary guarantors, percentage ownership		100.00%
7.75% Senior Secured Notes Due 2021 [Member] | Secured Debt [Member]
Condensed Financial Statements, Captions [Line Items]
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

XML

Condensed Consolidating Financial Information Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 449,934	$ 419,876	$ 1,226,867	$ 1,173,725
Expenses:
Cost of sales	295,917	287,236	817,139	805,555
Operating, selling, administrative and general expenses	79,114	69,431	232,737	200,431
Litigation settlement and judgment expense	3,750	225	5,843	1,725
Management fee expense	0	0	0	0
Restructuring expenses	1,548	0	1,548	0
Operating income	69,605	62,984	169,600	166,014
Other income (expenses):
Interest expense	(32,898)	(44,034)	(96,405)	(123,670)
Change in fair value of derivatives embedded within convertible debt	7,044	7,127	18,760	7,447
Acceleration of interest expense related to debt conversion	0	(994)	0	(5,112)
Equity (loss) income from real estate ventures	(916)	3,258	1,278	3,002
Equity (loss) income from investments	(579)	829	(2,273)	1,462
(Loss) gain on sale of investment securities available for sale	(821)	33	12,018	(38)
Impairment of investment securities available for sale	(12,211)	0	(12,211)	0
Provision for loss on real estate held for sale			0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	133	2,466	3,554	8,167
Income before provision for income taxes	29,357	31,669	94,321	57,272
Income tax benefit (expense)	(13,508)	(11,964)	(37,551)	(21,007)
Net income	15,849	19,705	56,770	36,265
Net income attributed to non-controlling interest	(3,644)	(4,826)	(5,741)	(10,881)
Net income attributed to Vector Group Ltd.	12,205	14,879	51,029	25,384
Comprehensive income attributed to non-controlling interest	(3,644)	(4,826)	(5,741)	(10,881)
Comprehensive (loss) income attributed to Vector Group Ltd.	(11,685)	23,894	26,357	41,218
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	6,372	6,099	20,266	17,315
Litigation settlement and judgment expense	0	0	0	0
Management fee expense	0	0	0	0
Restructuring expenses	0		0
Operating income	(6,372)	(6,099)	(20,266)	(17,315)
Other income (expenses):
Interest expense	(31,609)	(43,005)	(93,243)	(120,977)
Change in fair value of derivatives embedded within convertible debt	7,044	7,127	18,760	7,447
Acceleration of interest expense related to debt conversion		(994)		(5,112)
Equity (loss) income from real estate ventures	0	0	0	0
Equity (loss) income from investments	(579)	829	(2,273)	1,462
(Loss) gain on sale of investment securities available for sale	(821)	33	(1,157)	(38)
Impairment of investment securities available for sale	(4,224)		(4,224)
Provision for loss on real estate held for sale			0
Equity income in consolidated subsidiaries	32,335	36,428	104,083	96,554
Management fee income	2,562	2,467	7,687	7,402
Other, net	(61)	1,936	1,859	3,702
Income before provision for income taxes	(1,725)	(1,278)	11,226	(26,875)
Income tax benefit (expense)	13,930	16,157	39,803	52,259
Net income	12,205	14,879	51,029	25,384
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	12,205	14,879	51,029	25,384
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive (loss) income attributed to Vector Group Ltd.	(11,685)	23,894	26,357	41,218
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	264,480	266,328	748,394	758,645
Expenses:
Cost of sales	174,839	190,794	507,833	544,024
Operating, selling, administrative and general expenses	20,712	22,395	64,604	66,270
Litigation settlement and judgment expense	3,750	225	5,843	1,725
Management fee expense	2,562	2,467	7,687	7,402
Restructuring expenses	1,548		1,548
Operating income	61,069	50,447	160,879	139,224
Other income (expenses):
Interest expense	(1,288)	(1,026)	(3,158)	(3,265)
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Acceleration of interest expense related to debt conversion		0		0
Equity (loss) income from real estate ventures	0	0	0	0
Equity (loss) income from investments	0	0	0	0
(Loss) gain on sale of investment securities available for sale	0	0	13,175	0
Impairment of investment securities available for sale	(7,987)		(7,987)
Provision for loss on real estate held for sale			0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	(111)	296	409	780
Income before provision for income taxes	51,683	49,717	163,318	136,739
Income tax benefit (expense)	(24,043)	(21,491)	(69,450)	(57,846)
Net income	27,640	28,226	93,868	78,893
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	27,640	28,226	93,868	78,893
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive (loss) income attributed to Vector Group Ltd.	18,484	28,367	84,073	79,026
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	185,563	153,748	478,841	415,280
Expenses:
Cost of sales	121,078	96,442	309,306	261,531
Operating, selling, administrative and general expenses	52,139	41,137	148,235	117,046
Litigation settlement and judgment expense	0	0	0	0
Management fee expense	0	0	0	0
Restructuring expenses	0		0
Operating income	12,346	16,169	21,300	36,703
Other income (expenses):
Interest expense	(1)	(3)	(4)	(40)
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Acceleration of interest expense related to debt conversion		0		0
Equity (loss) income from real estate ventures	(916)	3,258	1,278	3,002
Equity (loss) income from investments	0	0	0	0
(Loss) gain on sale of investment securities available for sale	0	0	0	0
Impairment of investment securities available for sale	0		0
Provision for loss on real estate held for sale			0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	305	234	1,286	4,297
Income before provision for income taxes	11,734	19,658	23,860	43,962
Income tax benefit (expense)	(3,395)	(6,630)	(7,904)	(15,420)
Net income	8,339	13,028	15,956	28,542
Net income attributed to non-controlling interest	(3,644)	(4,826)	(5,741)	(10,881)
Net income attributed to Vector Group Ltd.	4,695	8,202	10,215	17,661
Comprehensive income attributed to non-controlling interest	(3,644)	(4,826)	(5,741)	(10,881)
Comprehensive (loss) income attributed to Vector Group Ltd.	4,695	8,202	10,215	17,661
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	(109)	(200)	(368)	(200)
Expenses:
Cost of sales	0	0	0	0
Operating, selling, administrative and general expenses	(109)	(200)	(368)	(200)
Litigation settlement and judgment expense	0	0	0	0
Management fee expense	(2,562)	(2,467)	(7,687)	(7,402)
Restructuring expenses	0		0
Operating income	2,562	2,467	7,687	7,402
Other income (expenses):
Interest expense	0	0	0	612
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Acceleration of interest expense related to debt conversion		0		0
Equity (loss) income from real estate ventures	0	0	0	0
Equity (loss) income from investments	0	0	0	0
(Loss) gain on sale of investment securities available for sale	0	0	0	0
Impairment of investment securities available for sale	0		0
Provision for loss on real estate held for sale			0
Equity income in consolidated subsidiaries	(32,335)	(36,428)	(104,083)	(96,554)
Management fee income	(2,562)	(2,467)	(7,687)	(7,402)
Other, net	0	0	0	(612)
Income before provision for income taxes	(32,335)	(36,428)	(104,083)	(96,554)
Income tax benefit (expense)	0	0	0	0
Net income	(32,335)	(36,428)	(104,083)	(96,554)
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	(32,335)	(36,428)	(104,083)	(96,554)
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive (loss) income attributed to Vector Group Ltd.	$ (23,179)	$ (36,569)	$ (94,288)	$ (96,687)

XML

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Revenues	$ 449,934	$ 419,876	$ 1,226,867	$ 1,173,725
Operating income (loss)	69,605	62,984	169,600	166,014
Equity (loss) income from real estate ventures	(916)	3,258	1,278	3,002
Depreciation and amortization	6,673	6,045	19,396	18,599
Capital expenditures			7,859	20,746
Litigation settlement and judgment expense	3,750	225	5,843	1,725
Restructuring expenses	1,548	0	1,548	0
Tobacco [Member]
Segment Reporting Information [Line Items]
Revenues	264,170	264,520	747,145	748,468
Operating income (loss)	63,630	52,993	169,515	147,395
Equity (loss) income from real estate ventures	0	0	0	0
Depreciation and amortization	2,850	2,853	8,717	7,934
Capital expenditures			3,305	7,911
E-Cigarettes [Member]
Segment Reporting Information [Line Items]
Revenues	201	1,608	881	9,977
Operating income (loss)	(2,146)	(2,910)	(7,710)	(7,100)
Equity (loss) income from real estate ventures	0	0	0	0
Depreciation and amortization	0	0	0	0
Capital expenditures			0	0
Real Estate [Member]
Segment Reporting Information [Line Items]
Revenues	185,563	153,748	478,841	415,280
Operating income (loss)	12,227	16,222	21,270	36,867
Equity (loss) income from real estate ventures	(916)	3,258	1,278	3,002
Depreciation and amortization	3,388	2,740	9,372	9,709
Capital expenditures			4,554	5,614
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenues	0	0	0	0
Operating income (loss)	(4,106)	(3,321)	(13,475)	(11,148)
Equity (loss) income from real estate ventures	0	0	0	0
Depreciation and amortization	435	452	1,307	956
Capital expenditures			0	7,221
MSA Settlements [Member]
Segment Reporting Information [Line Items]
Gain related to litigation settlement	(5,715)		(5,715)
Litigation settlement and judgment expense				1,419
Litigation Judgment Expense [Member]
Segment Reporting Information [Line Items]
Litigation settlement and judgment expense	3,750	$ 225	5,843	1,725
Restructuring Charges [Member]
Segment Reporting Information [Line Items]
Restructuring expenses	$ 1,548			$ 1,548
Pension Settlement Expense [Member]
Segment Reporting Information [Line Items]
Litigation settlement and judgment expense			$ 1,607

XML

Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015
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	$	101,960	$	101,960	$	—	$	—
Certificates of deposit	3,465		—		3,465		—
Bonds	12,368		12,368		—		—
Investment securities available for sale
Equity securities	106,976		106,976		—		—
Mutual funds invested in fixed income securities	54,864		54,864		—		—
Fixed income securities
U.S. Government securities	35,433		—		35,433		—
Corporate securities	54,741		—		54,741		—
U.S. mortgage backed securities	6,351		—		6,351		—
Commercial mortgage-backed securities	14,537		—		14,537		—
U.S. asset backed securities	13,360		—		13,360		—
Index-linked U.S. bonds	2,114		—		2,114		—
Total fixed income securities	126,536		—		126,536		—
Warrants (1)	577		—		—		577
Total	$	406,746	$	276,168	$	130,001	$	577
Liabilities:
Fair value of derivatives embedded within convertible debt	$	149,739	$	—	$	—	$	149,739

(1) Warrants are 1,000,000 warrants to purchase Ladenburg Thalmann Financial Services Inc. (“LTS”) common stock received on November 4, 2011 which were carried at $577 as of September 30, 2015 and are included in “Other assets.” The Company recognized a loss of $1,765 for the nine months ended September 30, 2015 related to the change in fair value of the Warrants.

	Fair Value Measurements as of December 31, 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	$	205,180	$	205,180	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	4,868		4,868		—		—
Investment securities available for sale
Equity securities	154,192		153,666		526		—
Mutual funds invested in fixed income securities	59,826		59,826		—		—
Fixed income securities
U.S. Government securities	35,446		—		35,446		—
Corporate securities	56,248		7,397		48,851		—
U.S. Government and federal agency	4,770		—		4,770		—
Commercial mortgage-backed securities	16,508		—		16,508		—
U.S. asset-backed securities	16,955		—		16,955		—
Index-linked U.S. bonds	2,098		—		2,098		—
Total fixed income securities	132,025		7,397		124,628		—
Warrants (1)	2,342		—		—		2,342
Total	$	561,895	$	430,937	$	128,616	$	2,342
Liabilities:
Fair value of derivatives embedded within convertible debt	$	169,386	$	—	$	—	$	169,386

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,342 as of December 31, 2014 and are included in “Other assets.” The Company recognized income of $584 for the year ended December 31, 2014 related to the change in fair value of the Warrants. The Company recognized income of $868 for the nine months ended September 30, 2014.

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, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Warrant	$	577	Option model	Stock price	$	2.11
				Exercise price	$	1.68
				Term (in years)	1.1
				Volatility	39.23		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	149,739	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.61
				Convertible trading price (as a percentage of par value)	111.63		%
				Volatility	18.72		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 6.5% (6.14%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,342	Option model	Stock price	$	3.95
				Exercise price	$	1.68
				Term (in years)	1.8
				Volatility	44.42		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	169,386	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	21.31
				Convertible trading price	106.8		%
				Volatility	16.00		%
				Implied credit spread	6.25% - 7.25% (6.75%)

XML

New Valley LLC Assets of “Escena, net (Details) - Escena, net - New Valley LLC [Member] - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investment Holdings [Line Items]
Land and land improvements	$ 8,902	$ 8,953
Building and building improvements	1,873	1,865
Other	1,596	1,568
Total Investment in Escena before depreciation	12,371	12,386
Less accumulated depreciation	(1,920)	(1,743)
Assets of Escena, net	$ 10,451	$ 10,643

XML

Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company's significant business segments for the three and nine months ended September 30, 2015 and 2014 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, Sagaponack 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.

Financial information for the Company's operations before taxes for the three and nine months ended September 30, 2015 and 2014 follows:

							Real			Corporate
	Tobacco			E-Cigarettes			Estate			and Other			Total
Three months ended September 30, 2015
Revenues	$	264,170		$	201		$	185,563		$	—		$	449,934
Operating income (loss)	63,630		(1)	(2,146		)	12,227			(4,106		)	69,605
Equity loss from real estate ventures	—			—			(916		)	—			(916		)
Depreciation and amortization	2,850			—			3,388			435			6,673
Three months ended September 30, 2014
Revenues	$	264,520		$	1,608		$	153,748		$	—		$	419,876
Operating income (loss)	52,993		(2)	(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
Nine months ended September 30, 2015
Revenues	$	747,145		$	881		$	478,841		$	—		$	1,226,867
Operating income (loss)	169,515		(3)	(7,710		)	21,270			(13,475		)	169,600
Equity income from real estate ventures	—			—			1,278			—			1,278
Depreciation and amortization	8,717			—			9,372			1,307			19,396
Capital expenditures	3,305			—			4,554			—			7,859
Nine months ended September 30, 2014
Revenues	$	748,468		$	9,977		$	415,280		$	—		$	1,173,725
Operating income (loss)	147,395		(4)	(7,100		)	36,867			(11,148		)	166,014
Equity income from real estate ventures	—			—			3,002			—			3,002
Depreciation and amortization	7,934			—			9,709			956			18,599
Capital expenditures	7,911			—			5,614			7,221			20,746

⁽¹⁾ Operating income includes $5,715 of income from MSA Settlement, $3,750 of litigation judgment expense and $1,548 of restructuring expense.

⁽²⁾ Operating income includes $225of litigation judgment expense.

⁽³⁾ Operating income includes $5,715 of income from MSA Settlement, $5,843 of litigation judgment expense, $1,548 of restructuring expense, and $1,607 of pension settlement expense.

⁽⁴⁾  Operating income includes $1,419 of income from MSA Settlement and $1,725 of litigation judgment expense.

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Investment Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2015

Available-for-sale Securities [Abstract]

Available-for-sale Securities

The components of investment securities available for sale at September 30, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,524	$	44,623	$	(1,171	)	$	106,976
Mutual funds invested in fixed income securities	54,864		—		—			54,864
Marketable debt securities	126,080		456		—			126,536
Total investment securities available for sale	$	244,468	$	45,079	$	(1,171	)	$	288,376

The components of investment securities available for sale at December 31, 2014 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	63,041	$	92,255	$	(1,104	)	$	154,192
Mutual funds invested in fixed income securities	61,485		—		(1,659		)	59,826
Marketable debt securities	130,311		2,630		(916		)	132,025
Total investment securities available for sale	$	254,837	$	94,885	$	(3,679	)	$	346,043

Schedule of Maturity Dates of Fixed Income Securities

The table below summarizes the maturity dates of marketable debt securities at September 30, 2015.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	35,433	$	—	$	35,433	$	—
Corporate securities	54,741		6,917		47,565		259
U.S. mortgage-backed securities	6,351		1,061		5,132		158
Commercial mortgage-backed securities	14,537		6,632		1,793		6,112
U.S. asset-backed securities	13,360		2,342		10,343		675
Index-linked U.S. bonds	2,114		—		2,114		—
Total marketable debt securities by maturity dates	$	126,536	$	16,952	$	102,380	$	7,204

Schedule of Unrealized Loss on Investments

The available-for-sale investment securities with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:

	In loss position for
	Less than 12 months					12 months or more
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Total Fair Value		Total Unrealized Losses
September 30, 2015
Marketable equity securities	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
	$	9,159	$	(1,171	)	$	—	$	—		$	9,159	$	(1,171	)
December 31, 2014
Marketable equity securities	$	6,599	$	(138	)	$	3,534	$	(966	)	$	10,133	$	(1,104	)
Mutual funds invested in fixed income securities	59,826		(1,659		)	—		—			59,826		(1,659		)
Marketable debt securities
U.S. Government securities	22,375		(18		)	—		—			22,375		(18		)
Corporate securities	30,896		(204		)	7,224		(131		)	38,120		(335		)
U.S. mortgage-backed securities	3,370		(26		)	—		—			3,370		(26		)
Commercial mortgage-backed securities	11,332		(46		)	5,176		(432		)	16,508		(478		)
U.S. asset-backed securities	15,228		(29		)	—		—			15,228		(29		)
Index-linked U.S. bonds	2,098		(30		)	—		—			2,098		(30		)
	$	151,724	$	(2,150	)	$	15,934	$	(1,529	)	$	167,658	$	(3,679	)

Schedule of Realized Gains (Losses)

Gross realized gains and losses on available-for-sale investment securities were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Gross realized gains on sales	$	129		$	100		$	13,601		$	151
Gross realized losses on sales	(950		)	(67		)	(1,583		)	(189		)
(Loss) gain on sale of investment securities available for sale	$	(821	)	$	33		$	12,018		$	(38	)
Gross realized losses on other-than-temporary impairments	$	(12,211	)	$	—		$	(12,211	)	$	—

XML

New Valley LLC (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	May. 31, 2014 USD ($)	Sep. 30, 2015 USD ($) units	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) units	Sep. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	May. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 13, 2013	Mar. 31, 2013 USD ($)
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures		$ (916)	$ 3,258	$ 1,278	$ 3,002
Distributions from non-consolidated real estate businesses				(11,205)	(5,540)
Investments in real estate ventures		194,052		194,052				$ 163,460
Operating income (loss)		69,605	62,984	169,600	166,014
Provision for loss on real estate held for sale		(229)	0	(229)	0
New Valley LLC [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		194,052		194,052				163,460
New Valley LLC [Member] | Douglas Elliman Realty LLC [Member]
Schedule of Investments [Line Items]
Ownership percentage									70.59%
New Valley LLC [Member] | Land Development [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		5,037		5,037				5,037
New Valley LLC [Member] | Milanosesto Holdings (Sesto Holdings)
Schedule of Investments [Line Items]
Investments in real estate ventures		5,037		5,037				5,037
New Valley LLC [Member] | Condominium and Mixed Use Development [Member]
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures		$ 248	5,090	$ 923	7,389
Number of units in real estate property sold | units		5		5
Investments in real estate ventures		$ 133,407		$ 133,407				108,149
Maximum exposure to loss as a result of this investment		$ 130,027		$ 130,027
New Valley LLC [Member] | Condominium and Mixed Use Development [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Ownership percentage		5.00%		5.00%
New Valley LLC [Member] | Condominium and Mixed Use Development [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Ownership percentage		49.50%		49.50%
New Valley LLC [Member] | 10 Madison Square Park West (1107 Broadway)
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures					$ 2,254
Investments in real estate ventures		$ 9,522		$ 9,522				6,383
New Valley LLC [Member] | The Marquand
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures			$ 5,000
Percentage of units in real estate property sold			40.00%		40.00%
Investments in real estate ventures		13,900		13,900				12,000
New Valley LLC [Member] | 11 Beach Street
Schedule of Investments [Line Items]
Investments in real estate ventures		11,928		11,928				12,328
New Valley LLC [Member] | 20 Times Square (701 Seventh Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures		$ 13,095		$ 13,095				12,481
New Valley LLC [Member] | 111 Murray Street
Schedule of Investments [Line Items]
Ownership percentage		9.50%		9.50%		25.00%
Distributions from non-consolidated real estate businesses				$ (11,441)
Investments in real estate ventures		$ 16,114		16,114				27,319
New Valley LLC [Member] | 357 West (160 Leroy Street)
Schedule of Investments [Line Items]
Investments in real estate ventures		1,950		1,950				1,467
New Valley LLC [Member] | PUBLIC Chrystie House (Chrystie Street)
Schedule of Investments [Line Items]
Investments in real estate ventures		5,297		5,297				3,300
New Valley LLC [Member] | The Dutch (25-19 43rd Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures		980		980				733
New Valley LLC [Member] | Queens Plaza (23-10 Queens Plaza South)
Schedule of Investments [Line Items]
Investments in real estate ventures		14,732		14,732				11,082
New Valley LLC [Member] | 87 Park (8701 Collins Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures		5,654		5,654				6,144
New Valley LLC [Member] | 125 Greenwich Street
Schedule of Investments [Line Items]
Investments in real estate ventures		11,193		11,193				9,308
New Valley LLC [Member] | West Hollywood Edition (9040 Sunset Boulevard)
Schedule of Investments [Line Items]
Investments in real estate ventures		5,604		5,604				5,604
New Valley LLC [Member] | 76 Eleventh Avenue
Schedule of Investments [Line Items]
Ownership percentage							5.10%
Investments in real estate ventures		17,000		17,000				0
Investment partnership accounted for under the equity method							$ 17,000
Maximum exposure to loss as a result of this investment		17,000		17,000
New Valley LLC [Member] | Monad Terrace
Schedule of Investments [Line Items]
Ownership percentage						31.30%
Investments in real estate ventures		6,438		6,438				0
Investment partnership accounted for under the equity method						$ 6,200
Maximum exposure to loss as a result of this investment		6,438		6,438
New Valley LLC [Member] | 10 Madison Square Park West, Queens Plaza and 125 Greenwich Street, 76 Eleventh Avenue and Monad Terrace [Member]
Schedule of Investments [Line Items]
Investment partnership accounted for under the equity method		35,776		35,776
New Valley LLC [Member] | 111 Murray Street, Queens Plaza and 125 Greenwich Street [Member]
Schedule of Investments [Line Items]
Investment partnership accounted for under the equity method			$ 27,225		$ 27,225
New Valley LLC [Member] | 10 Madison Square Park West, 125 Greenwich Street, 11 Beach Street and 20 Times Square [Member]
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures				344
Distributions from non-consolidated real estate businesses					(4,547)
New Valley LLC [Member] | Apartment Buildings [Member]
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures		(72)	(87)	1,730	(251)
Distributions from non-consolidated real estate businesses				(1,989)	(375)
Investments in real estate ventures		18,258		18,258				18,517
Maximum exposure to loss as a result of this investment		$ 18,258		$ 18,258
New Valley LLC [Member] | Apartment Buildings [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Ownership percentage		7.60%		7.60%
New Valley LLC [Member] | Apartment Buildings [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Ownership percentage		16.30%		16.30%
New Valley LLC [Member] | Maryland Portfolio [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		$ 1,377		$ 1,377				3,234
New Valley LLC [Member] | ST Portfolio [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		16,881		16,881				15,283
New Valley LLC [Member] | Hotels [Member]
Schedule of Investments [Line Items]
Equity (loss) income from real estate ventures		(1,323)	(2,053)	(2,330)	(4,222)
Investments in real estate ventures		29,733		29,733				29,786
Investment partnership accounted for under the equity method		2,277	1,973	2,277	1,973
Maximum exposure to loss as a result of this investment		$ 29,733		$ 29,733
New Valley LLC [Member] | Hotels [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Ownership percentage		5.00%		5.00%
New Valley LLC [Member] | Hotels [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Ownership percentage		49.00%		49.00%
New Valley LLC [Member] | Park Lane Hotel [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		$ 19,373		$ 19,373				19,341
New Valley LLC [Member] | Hotel Taiwana [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		7,337		7,337				7,629
New Valley LLC [Member] | Coral Beach and Tennis Club [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		$ 3,023		$ 3,023				2,816
New Valley LLC [Member] | Commercial [Member]
Schedule of Investments [Line Items]
Ownership percentage		49.00%		49.00%
Equity (loss) income from real estate ventures		$ 20		$ 47
Investments in real estate ventures		5,638		5,638				0
Investment partnership accounted for under the equity method		5,931		5,931
Maximum exposure to loss as a result of this investment		5,638		5,638
New Valley LLC [Member] | Plaza at Harmon Meadow [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		5,638		5,638				0
New Valley LLC [Member] | Harmon Meadow [Member]
Schedule of Investments [Line Items]
Investment partnership accounted for under the equity method		340		340
New Valley LLC [Member] | Other Investments [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures		1,979		1,979				$ 1,971
New Valley LLC [Member] | Escena, net
Schedule of Investments [Line Items]
Operating income (loss)		$ (779)	$ (804)	$ (227)	(571)
New Valley LLC [Member] | Indian Creek [Member]
Schedule of Investments [Line Items]
Ownership percentage										80.00%
Distributions from non-consolidated real estate businesses	$ (7,100)
Investments in real estate ventures										$ 7,616
Operating income (loss)					$ 2,400
Sales proceeds	$ 14,400

XML

Summary of Significant Accounting Policies (Antidilutive Securities Excluded from Earnings Per Share) (Details) - Weighted-average number of shares issuable upon conversion of debt - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	24,895,477	34,229,687	25,186,773	32,820,165
Weighted-average conversion price (dollars per share)	$ 19.63	$ 17.49	$ 19.53	$ 16.48

XML

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Tax portion of revenues and cost of goods sold	$ 112,773	$ 115,323	$ 319,044	$ 327,434

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

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 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 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 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.

Revisions to December 31, 2014 Consolidated Balance Sheet. The Company has revised its December 31, 2014 Consolidated Balance Sheet, which originally presented deferred income tax assets and liabilities (current and noncurrent) on a gross basis, rather than a net basis. The revisions conform to ASC 740-10-45-6 which states all current deferred tax liabilities and assets shall be offset and presented as a single amount and all noncurrent deferred tax liabilities and assets shall be offset and presented as a single amount. The Company assessed the materiality of this error on previously issued financial statements and concluded that the error was immaterial.

The revisions are presented in the table below:

	December 31, 2014
	As Previously Reported		Revision			As Revised
Deferred income taxes	$	29,192	$	(29,192	)	$	—
Total current assets	857,846		(29,192		)	828,654
Deferred income taxes	51,129		(51,129		)	—
Total assets	$	1,573,392	$	(80,321	)	$	1,493,071
Deferred income taxes, net	$	57,671	$	(29,192	)	$	28,479
Total current liabilities	270,095		(29,192		)	240,903
Deferred income taxes, net	145,639		(51,129		)	94,510
Total liabilities	1,551,340		(80,321		)	1,471,019
Total stockholders' equity	22,052		—			22,052
Total liabilities and stockholders' equity	$	1,573,392	$	(80,321	)	$	1,493,071

(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 and E-Cigarettes 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 fixed or 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 includes federal excise taxes on tobacco sales in revenues and cost of goods sold. Since the Company’s primary 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 only 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 commissions earned by the Company’s real estate 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 expenses are recognized concurrently with related revenues. Property management fees earned are recorded as revenue when the related services are performed.

(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 29, 2015. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income attributed to Vector Group Ltd.	$	12,205		$	14,879		$	51,029		$	25,384
Expense attributed to participating securities	(360		)	(423		)	(1,510		)	(739		)
Net income attributed to Vector Group Ltd. available to common stockholders	$	11,845		$	14,456		$	49,519		$	24,645

Basic and diluted EPS were calculated using the following shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2015	2014	2015	2014
Weighted-average shares for basic EPS	118,023,224	108,374,350	117,660,001	106,464,835
Plus incremental shares related to stock options and non-vested restricted stock	134,315	120,354	175,097	118,724
Weighted-average shares for diluted EPS	118,157,539	108,494,704	117,835,098	106,583,559

The following were outstanding during the three and nine months ended September 30, 2015 and 2014, 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,
	2015		2014		2015		2014
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		34,229,687		25,186,773		32,820,165
Weighted-average conversion price	$	19.63	$	17.49	$	19.53	$	16.48

(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. 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, 2015, the range of estimated fair market values of the Company's embedded derivatives was between $148,769 and $150,125. The Company recorded the fair market value of its embedded derivatives at the approximate midpoint of the range at $149,739 as of September 30, 2015. At December 31, 2014, the range of estimated fair market values of the Company's embedded derivatives was between $167,593 and $171,215. The Company recorded the fair market value of its embedded derivatives at the midpoint of the range at $169,386 as of December 31, 2014. The estimated fair market value of the Company's embedded derivatives could change significantly based on future market conditions. (See Note 6.)

(f) Investment in Real Estate Ventures:

The Company's interest in Variable Interest Entities ("VIE") is primarily in the form of equity ownership. The Company examines specific criteria and uses judgment when determining if the Company is the primary beneficiary of a VIE. Factors considered include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's executive committee, existence of unilateral kick-out rights exclusive of protective rights or voting rights and level of economic disproportionality between the Company and its other partner(s).

Accounting guidance requires the consolidation of VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company's maximum exposure to loss in its investments in unconsolidated VIEs is limited to its investment in the unconsolidated VIEs which is the carrying value. The Company's maximum exposure to loss in its investment in its consolidated VIEs is limited to its investment which is the carrying value of the investment net of the non-controlling interest. Creditors of the consolidated VIEs have no recourse to the general credit of the primary beneficiary.

(g) Other Income, Net:

Other income, net consisted of:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
(Loss) gain on warrants	$	(1,282	)	$	991		$	(1,765	)	$	868
Interest and dividend income	1,578			1,476			5,185			3,665
Accretion of interest income from debt discount on notes receivable	5			11			79			87
Gain on long-term investment	137			—			361			—
Out-of-period adjustment	—			—			—			1,231
Acceleration of closing fee related to termination of Douglas Elliman joint venture	—			—			—			2,335
Provision for loss on real estate held for sale	(229		)	—			(229		)	—
Loss on sale of assets	(75		)	—			(75		)	—
Other expense	(1		)	(12		)	(2		)	(19		)
Other income, net	$	133		$	2,466		$	3,554		$	8,167

The out-of-period adjustment 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 2014 was not material to the Company's 2014 consolidated financial statements.

(h) Other Current Liabilities:

Other current liabilities consisted of:

	September 30, 2015		December 31, 2014
Accounts payable	$	11,966	$	10,856
Accrued promotional expenses	20,053		20,191
Accrued excise and payroll taxes payable, net	5,034		23,172
Accrued interest	16,121		28,321
Commissions payable	14,942		9,523
Accrued salary and benefits	17,232		16,009
Other current liabilities	26,455		18,683
Total other current liabilities	$	111,803	$	126,755

(i) Goodwill and Other Intangible Assets:

The components of “Goodwill and other intangible assets, net” were as follows:

	September 30, 2015		December 31, 2014
Goodwill	$	70,791	$	70,791
Indefinite life intangibles:
Intangible asset associated with benefit under the MSA	107,511		107,511
Trademark - Douglas Elliman	80,000		80,000
Intangibles with a finite life, net	7,178		11,670
Total goodwill and other intangible assets, net	$	265,480	$	269,972

(j) Treasury shares:

On September 4, 2015, the Company canceled all of its 4,145,247 treasury shares with a cost basis of $12,857. The Company reduced Additional paid-in-capital in the Condensed Statement of Stockholders' Deficiency by its cost basis in the Treasury Stock.

(k) New Accounting Pronouncements:

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-16, Business Combination (Topic 805): Simplifying the Accounting for Measurement Period Adjustments (“ASU 2015-16”), which requires adjustments to provisional amounts initially recorded in a business combination that are identified during the measurement period to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU 2015-15 also requires the disclosure of the nature and amount of measurement-period adjustments recognized in the current period, including separately the amounts in current-period income statement line items that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance is effective for the Company beginning January 1, 2016. The Company will apply the guidance prospectively for all business combinations that occur subsequent to the adoption date.

In August 2015, FASB issued ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measure of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting), which codifies an Securities and Exchange Commission staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangement as assets. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 clarifies that the Securities and Exchange Commission staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. This guidance is effective immediately and will be applied prospectively to any line-of-credit arrangements entered into subsequent to the effective date.

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Company will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for the Company beginning January 1, 2016. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. ASU 2015-02 requires management to reevaluate all legal entities under a revised consolidation model specifically (1) modify the evaluation of whether limited partnership and similar legal entities are Variable Interest Entities (“VIEs”), (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The Company is evaluating the effect that this guidance will have on its consolidated financial statements.

In May 2014, FASB issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), (“ASU 2014-9”). ASU 2014-9 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As amended by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date the new standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted for annual reporting periods beginning subsequent to December 15, 2016. The new standard is required to be applied retrospectively to each prior reporting period presented or with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method and it has not determined the impact of the new standard on its consolidated financial statements.

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Restructuring - Schedule of Restructuring and Related Costs (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 30, 2015 employee	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Cash Charges		$ 1,524		$ 1,524
Total Estimated Costs, Non Cash Charges		4,454		4,454
Restructuring Expense, Non Cash Charges				454
Restructuring Expense, Cash Charges				1,094
Total Estimated Costs		5,978		5,978
Restructuring expenses		1,548	$ 0	1,548	$ 0
Employee severance and benefits
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Cash Charges		1,094		1,094
Restructuring Expense, Cash Charges				1,094
Lease termination costs
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Cash Charges		223		223
Restructuring Expense, Cash Charges				0
Other restructuring expenses
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Cash Charges		207		207
Restructuring Expense, Cash Charges				0
Employee pension benefits
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Non Cash Charges		4,000		4,000
Restructuring Expense, Non Cash Charges				0
Point of Sale inventory impairment
Restructuring Cost and Reserve [Line Items]
Total Estimated Costs, Non Cash Charges		454		454
Restructuring Expense, Non Cash Charges				$ 454
Tobacco [Member] | Employee severance and benefits
Restructuring Cost and Reserve [Line Items]
Restructuring expenses		$ 1,094
Subsequent Event [Member] | Tobacco [Member]
Restructuring Cost and Reserve [Line Items]
Expected number of positions eliminated | employee	95
Expected percent of positions eliminated	0.00%

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Long-Term Investments (Tables)

9 Months Ended

Sep. 30, 2015

Long-term Investments [Abstract]

Long-term investments

Long-term investments consisted of the following:

	September 30, 2015		December 31, 2014
Investments accounted at cost	$	42,056	$	32,239
Investments accounted under the equity method	11,592		8,053
	$	53,648	$	40,292

Long-term investments accounted for at cost are summarized as follows:

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Long-term investments	$	41,541	$	46,435	$	31,541	$	38,039
Real estate partnership	515		587		698		1,108
	$	42,056	$	47,022	$	32,239	$	39,147

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Summary of Significant Accounting Policies (Schedule of prior period revisions) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Deferred income taxes	$ 0	$ 0
Total current assets	686,188	828,654
Deferred income taxes		0
Total assets	1,398,801	1,493,071
Deferred income taxes, net	7,321	28,479
Total current liabilities	228,790	240,903
Deferred income taxes, net	96,497	94,510
Total liabilities	1,455,628	1,471,019
Total stockholders' equity	(56,827)	22,052
Total liabilities and stockholders' equity	$ 1,398,801	1,493,071
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Deferred income taxes		29,192
Total current assets		857,846
Deferred income taxes		51,129
Total assets		1,573,392
Deferred income taxes, net		57,671
Total current liabilities		270,095
Deferred income taxes, net		145,639
Total liabilities		1,551,340
Total stockholders' equity		22,052
Total liabilities and stockholders' equity		1,573,392
Revision
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Deferred income taxes		(29,192)
Total current assets		(29,192)
Deferred income taxes		(51,129)
Total assets		(80,321)
Deferred income taxes, net		(29,192)
Total current liabilities		(29,192)
Deferred income taxes, net		(51,129)
Total liabilities		(80,321)
Total stockholders' equity		0
Total liabilities and stockholders' equity		$ (80,321)

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Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2015

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, 2015
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	$	101,960	$	101,960	$	—	$	—
Certificates of deposit	3,465		—		3,465		—
Bonds	12,368		12,368		—		—
Investment securities available for sale
Equity securities	106,976		106,976		—		—
Mutual funds invested in fixed income securities	54,864		54,864		—		—
Fixed income securities
U.S. Government securities	35,433		—		35,433		—
Corporate securities	54,741		—		54,741		—
U.S. mortgage backed securities	6,351		—		6,351		—
Commercial mortgage-backed securities	14,537		—		14,537		—
U.S. asset backed securities	13,360		—		13,360		—
Index-linked U.S. bonds	2,114		—		2,114		—
Total fixed income securities	126,536		—		126,536		—
Warrants (1)	577		—		—		577
Total	$	406,746	$	276,168	$	130,001	$	577
Liabilities:
Fair value of derivatives embedded within convertible debt	$	149,739	$	—	$	—	$	149,739

(1) Warrants are 1,000,000 warrants to purchase Ladenburg Thalmann Financial Services Inc. (“LTS”) common stock received on November 4, 2011 which were carried at $577 as of September 30, 2015 and are included in “Other assets.” The Company recognized a loss of $1,765 for the nine months ended September 30, 2015 related to the change in fair value of the Warrants.

	Fair Value Measurements as of December 31, 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	$	205,180	$	205,180	$	—	$	—
Certificates of deposit	3,462		—		3,462		—
Bonds	4,868		4,868		—		—
Investment securities available for sale
Equity securities	154,192		153,666		526		—
Mutual funds invested in fixed income securities	59,826		59,826		—		—
Fixed income securities
U.S. Government securities	35,446		—		35,446		—
Corporate securities	56,248		7,397		48,851		—
U.S. Government and federal agency	4,770		—		4,770		—
Commercial mortgage-backed securities	16,508		—		16,508		—
U.S. asset-backed securities	16,955		—		16,955		—
Index-linked U.S. bonds	2,098		—		2,098		—
Total fixed income securities	132,025		7,397		124,628		—
Warrants (1)	2,342		—		—		2,342
Total	$	561,895	$	430,937	$	128,616	$	2,342
Liabilities:
Fair value of derivatives embedded within convertible debt	$	169,386	$	—	$	—	$	169,386

(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $2,342 as of December 31, 2014 and are included in “Other assets.” The Company recognized income of $584 for the year ended December 31, 2014 related to the change in fair value of the Warrants. The Company recognized income of $868 for the nine months ended September 30, 2014.

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 based on quoted market prices of securities that are thinly traded.

The fair value of derivatives embedded within convertible debt was derived using a valuation model. These derivatives 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 due 2020 to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt are presented on the Condensed Consolidated Statements of Operations.

The value of the embedded derivatives is contingent on changes in implied interest rates of the convertible debt, the Company's stock price, stock volatility as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on the Company's 2020 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 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, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Warrant	$	577	Option model	Stock price	$	2.11
				Exercise price	$	1.68
				Term (in years)	1.1
				Volatility	39.23		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	149,739	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.61
				Convertible trading price (as a percentage of par value)	111.63		%
				Volatility	18.72		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 6.5% (6.14%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities are as follows at December 31, 2014:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2014		Valuation Technique	Unobservable Input	Range (Actual)
Warrants	$	2,342	Option model	Stock price	$	3.95
				Exercise price	$	1.68
				Term (in years)	1.8
				Volatility	44.42		%
				Dividend rate	—
				Risk-free return	0.70		%
Fair value of derivatives embedded within convertible debt	$	169,386	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	21.31
				Convertible trading price	106.8		%
				Volatility	16.00		%
				Implied credit spread	6.25% - 7.25% (6.75%)

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of September 30, 2015 and December 31, 2014.