Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 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 (“SEC”) Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Affiliates Whose Securities Collateralize an Issue Registered or Being Registered.” Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several.

The Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting.

The Company has outstanding $600,000 principal amount of its 7.75% Senior Secured Notes due 2021 that are guaranteed subject to certain customary automatic release provisions described above on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of its cigarette businesses. (See Note 9.) The notes are not guaranteed by any of the Company’s subsidiaries engaged in the real estate businesses conducted through its subsidiary New Valley.

Presented herein are Condensed Consolidating Balance Sheets as of December 31, 2015 and 2014 and the related Condensed Consolidating Statements of Operations and Cash Flows for the years ended December 31, 2015, 2014 and 2013 of Vector Group. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).

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

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2015
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	111,470		$	12,375	$	116,523	$	—		$	240,368
Investment securities available for sale	131,810			50,166		—		—			181,976
Accounts receivable - trade, net	—			15,913		7,976		—			23,889
Intercompany receivables	11,293			—		—		(11,293		)	—
Inventories	—			86,516		—		—			86,516
Income taxes receivable, net	8,213			—		—		(5,372		)	2,841
Restricted assets	—			7,781		1,414		—			9,195
Other current assets	575			3,747		34,632		—			38,954
Total current assets	263,361			176,498		160,545		(16,665		)	583,739
Property, plant and equipment, net	1,711			54,097		19,824		—			75,632
Real estate held for sale, net	—			—		23,318		—			23,318
Long-term investments	61,747			478		501		—			62,726
Investments in real estate ventures	—			—		217,168		—			217,168
Investments in consolidated subsidiaries	532,501			—		—		(532,501		)	—
Restricted assets	1,713			10,590		—		—			12,303
Goodwill and other intangible assets, net	—			107,511		156,448		—			263,959
Prepaid pension costs	—			20,650		—		—			20,650
Other assets	37,723			11,769		1,769		—			51,261
Total assets	$	898,756		$	381,593	$	579,573	$	(549,166	)	$	1,310,756
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	8,733	$	186	$	—		$	8,919
Current portion of employee benefits	—			915		—		—			915
Intercompany payables	—			586		10,707		(11,293		)	—
Income taxes payable, net	—			5,464		4		(5,372		)	96
Litigation accruals and current payments due under the Master Settlement Agreement	—			52,145		—		—			52,145
Other current liabilities	38,140			74,083		41,994		—			154,217
Total current liabilities	38,140			141,926		52,891		(16,665		)	216,292
Notes payable, long-term debt and other obligations, less current portion	878,509			7,519		221		—			886,249
Fair value of derivatives embedded within convertible debt	144,042			—		—		—			144,042
Non-current employee benefits	39,244			15,811		—		—			55,055
Deferred income taxes, net	2,675			33,791		42,963		—			79,429
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,193			44,982		4,675		—			51,850
Total liabilities	1,104,803			244,029		100,750		(16,665		)	1,432,917
Commitments and contingencies
Stockholders’ (deficiency) equity attributed to Vector Group Ltd.	(206,047		)	137,564		394,937		(532,501		)	(206,047		)
Non-controlling interest	—			—		83,886		—			83,886
Total stockholders’ (deficiency) equity	(206,047		)	137,564		478,823		(532,501		)	(122,161		)
Total liabilities and stockholders’ deficiency	$	898,756		$	381,593	$	579,573	$	(549,166	)	$	1,310,756

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	202,252			66,848		—		—			269,100
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	585			9,133		26,686		—			36,404
Total current assets	416,438			195,963		138,315		681			751,397
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	51,506			519		698		—			52,723
Investments in real estate ventures	—			—		163,460		—			163,460
Investments in consolidated subsidiaries	518,567			—		—		(518,567		)	—
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	40,913			10,743		2,246		—			53,902
Total assets	$	1,031,779		$	411,223	$	498,138	$	(517,886	)	$	1,423,254
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY:
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
Other current liabilities	36,653			58,677		31,425		—			126,755
Total current liabilities	62,537			116,327		32,879		681			212,424
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	14,176			43,058		38,670		—			95,904
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	921			51,775		4,383		—			57,079
Total liabilities	1,131,538			235,752		75,963		681			1,443,934
Commitments and contingencies
Stockholders’ (deficiency) equity attributed to Vector Group Ltd.	(99,759		)	175,471		343,096		(518,567		)	(99,759		)
Non-controlling interest	—			—		79,079		—			79,079
Total stockholders’ (deficiency) equity	(99,759		)	175,471		422,175		(518,567		)	(20,680		)
Total liabilities and stockholders’ deficiency	$	1,031,779		$	411,223	$	498,138	$	(517,886	)	$	1,423,254

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,016,279		$	641,406		$	(488	)	$	1,657,197
Expenses:
Cost of sales	—			699,440			410,287			—			1,109,727
Operating, selling, administrative and general expenses	29,237			84,437			207,035			(488		)	320,221
Litigation, settlement and judgment expense	—			20,072			—			—			20,072
Management fee expense	—			10,250			—			(10,250		)	—
Restructuring charges	—			7,257			—			—			7,257
Operating (loss) income	(29,237		)	194,823			24,084			10,250			199,920
Other income (expenses):
Interest expense	(115,731		)	(4,953		)	(7		)	—			(120,691		)
Change in fair value of derivatives embedded within convertible debt	24,455			—			—			—			24,455
Equity in earnings from real estate ventures	—			—			2,001			—			2,001
Equity in losses from investments	(2,640		)	(41		)	—			—			(2,681		)
(Loss) gain on sale of investment securities available for sale	(2,037		)	13,175			—			—			11,138
Impairment of investment securities available for sale	(4,859		)	(7,987		)	—			—			(12,846		)
Equity in earnings in consolidated subsidiaries	125,042			—			—			(125,042		)	—
Management fee income	10,250			—			—			(10,250		)	—
Other, net	4,016			639			1,754			—			6,409
Income before provision for income taxes	9,259			195,656			27,832			(125,042		)	107,705
Income tax benefit (expense)	49,939			(82,282		)	(8,890		)	—			(41,233		)
Net income	59,198			113,374			18,942			(125,042		)	66,472
Net income attributed to non-controlling interest	—			—			(7,274		)	—			(7,274		)
Net income attributed to Vector Group Ltd.	$	59,198		$	113,374		$	11,668		$	(125,042	)	$	59,198
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(7,274	)	$	—		$	(7,274	)
Comprehensive income attributed to Vector Group Ltd.	$	52,228		$	105,456		$	11,668		$	(117,124	)	$	52,228

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,030,157		$	561,467		$	(309	)	$	1,591,315
Expenses:
Cost of sales	—			743,032			354,028			—			1,097,060
Operating, selling, administrative and general expenses	24,262			90,208			165,181			(309		)	279,342
Litigation, settlement and judgment expense	—			2,475			—			—			2,475
Management fee expense	—			9,870			—			(9,870		)	—
Operating (loss) income	(24,262		)	184,572			42,258			9,870			212,438
Other income (expenses):
Interest expense	(157,321		)	(4,241		)	(41		)	612			(160,991		)
Change in fair value of derivatives embedded within convertible debt	19,409			—			—			—			19,409
Acceleration of interest expense related to debt conversion	(5,205		)	—			—			—			(5,205		)
Equity in earnings from real estate ventures	—			—			4,103			—			4,103
Equity in earnings from investments	3,122			18			—			—			3,140
Loss on sale of investment securities available for sale	(11		)	—			—			—			(11		)
Equity in earnings in consolidated subsidiaries	124,001			—			—			(124,001		)	—
Management fee income	9,870			—			—			(9,870		)	—
Other, net	4,178			1,044			4,786			(612		)	9,396
(Loss) income before provision for income taxes	(26,219		)	181,393			51,106			(124,001		)	82,279
Income tax benefit (expense)	63,064			(78,801		)	(17,428		)	—			(33,165		)
Net income	36,845			102,592			33,678			(124,001		)	49,114
Net income attributed to non-controlling interest	—			—			(12,258		)	—			(12,258		)
Net income attributed to Vector Group Ltd.	$	36,845		$	102,592		$	21,420		$	(124,001	)	$	36,856
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(12,258	)	$	—		$	(12,258	)
Comprehensive income attributed to Vector Group Ltd.	$	34,922		$	102,536		$	21,420		$	(123,956	)	$	34,922

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Year Ended December 31, 2013
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Revenues	$	—		$	1,014,341		$	65,580		$	—		$	1,079,921
Expenses:
Cost of sales	—			729,393			37,638			—			767,031
Operating, selling, administrative and general expenses	23,685			77,780			12,133			—			113,598
Litigation judgment expense	—			88,106			—			—			88,106
Management fee expense	—			9,508			—			(9,508		)	—
Operating (loss) income	(23,685		)	109,554			15,809			9,508			111,186
Other income (expenses):
Interest expense	(130,417		)	(1,716		)	(14		)	—			(132,147		)
Changes in fair value of derivatives embedded within convertible debt	18,935			—			—			—			18,935
Acceleration of interest expense related to debt conversion	(12,414		)	—			—			—			(12,414		)
Loss on extinguishment of debt	(21,458		)	—			—			—			(21,458		)
Equity in earnings from real estate ventures	—			—			22,925			—			22,925
(Loss) gain on sale of investment securities available for sale	(272		)	5,424			—			—			5,152
Gain on acquisition of Douglas Elliman	—			—			60,842			—			60,842
Equity in earnings from investments	3,126			—			—			—			3,126
Equity in earnings in consolidated subsidiaries	144,689			—			—			(144,689		)	—
Management fee income	9,508			—			—			(9,508		)	—
Other, net	1,462			2,763			348			—			4,573
(Loss) income before provision for income taxes	(10,526		)	116,025			99,910			(144,689		)	60,720
Income tax benefit (expense)	47,826			(30,758		)	(40,740		)	—			(23,672		)
Net income	37,300			85,267			59,170			(144,689		)	37,048
Net loss attributed to non-controlling interest	—			—			252			—			252
Net income attributed to Vector Group Ltd.	$	37,300		$	85,267		$	59,422		$	(144,689	)	$	37,300
Comprehensive loss attributed to non-controlling interest	$	—		$	—		$	252		$	—		$	252
Comprehensive income attributed to Vector Group Ltd.	$	52,894		$	102,344		$	59,422		$	(161,766	)	$	52,894

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	136,370		$	172,065		$	45,715		$	(209,671	)	$	144,479
Cash flows from investing activities:
Sale of investment securities	256,161			14,415			—			—			270,576
Maturities of investment securities	5,491			—			—			—			5,491
Purchase of investment securities	(207,822		)	(6,324		)	—			—			(214,146		)
Proceeds from sale or liquidation of long-term investments	1,106			—			197			—			1,303
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in real estate ventures	—			—			(70,272		)	—			(70,272		)
Distributions from investments in real estate ventures	—			—			17,563			—			17,563
Increase in cash surrender value of life insurance policies	(1,257		)	(485		)	—			—			(1,742		)
Increase in restricted assets	(6		)	(6,883		)	—			—			(6,889		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Investments in subsidiaries	(103,174		)	—			—			103,174			—
Proceeds from sale of fixed assets	—			4			—			—			4
Repayment of notes receivable	—			—			4,000			—			4,000
Capital expenditures	—			(3,730		)	(7,247		)	—			(10,977		)
Proceeds from sale of preferred securities	—			—			1,000			—			1,000
Investments in real estate held for sale	—			—			(12,603		)	—			(12,603		)
Pay down of investment securities	8,739			—			—			—			8,739
Net cash used in investing activities	(50,762		)	(3,003		)	(71,772		)	103,174			(22,363		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			1,799			306			—			2,105
Deferred financing costs	—			(624		)	—			—			(624		)
Repayments of debt	—			(6,362		)	(322		)	—			(6,684		)
Borrowings under revolver	—			153,361			—			—			153,361
Repayments on revolver	—			(167,915		)	—			—			(167,915		)
Capital contributions received	—			33,658			69,516			(103,174		)	—
Intercompany dividends paid	—			(181,825		)	(29,343		)	211,168			—
Dividends and distributions on common stock	(188,151		)	—			—			—			(188,151		)
Distributions to non-controlling interest	—			—			(3,280		)	—			(3,280		)
Contributions from non-controlling interest	—			—			813			—			813
Proceeds from exercise of Vector options	1,441			—			—			—			1,441
Tax benefit of options exercised	821			1,497			—			(1,497		)	821
Net cash (used in) provided by financing activities	(185,889		)	(166,411		)	37,690			106,497			(208,113		)
Net (decrease) increase in cash and cash equivalents	(100,281		)	2,651			11,633			—			(85,997		)
Cash and cash equivalents, beginning of year	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of year	$	111,470		$	12,375		$	116,523		$	—		$	240,368

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2014
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	61,779		$	83,671		$	62,656		$	(100,730	)	$	107,376
Cash flows from investing activities:
Sale of investment securities	154,615			—			—			—			154,615
Maturities of investment securities	930			—			—			—			930
Purchase of investment securities	(299,417		)	(6,314		)	—			—			(305,731		)
Proceeds from sale of or liquidation of long-term investments	2,367			—			49			—			2,416
Purchase of long-term investments	(12,000		)	—			—			—			(12,000		)
Investments in real estate ventures	—			—			(40,916		)	—			(40,916		)
Distributions from investments in real estate ventures	—			—			7,309			—			7,309
Increase in cash surrender value of life insurance policies	—			(484		)	—			—			(484		)
Decrease (increase) in restricted assets	188			(371		)	(689		)	—			(872		)
Issuance of notes receivable	(35,000		)	—			(8,250		)	35,000			(8,250		)
Investments in subsidiaries	(85,278		)	—			—			85,278			—
Proceeds from sale of fixed assets	—			4			—			—			4
Purchase of subsidiaries	—			—			(750		)	—			(750		)
Repayment of notes receivable	35,000			—			4,850			(35,000		)	4,850
Purchase of preferred securities	—			—			(1,000		)	—			(1,000		)
Capital expenditures	(15		)	(16,466		)	(6,923		)	—			(23,404		)
Pay down of investment securities	1,849			—			—			—			1,849
Net cash used in investing activities	(236,761		)	(23,631		)	(46,320		)	85,278			(221,434		)
Cash flows from financing activities:
Proceeds from issuance of debt	408,750			40,164			—			(35,000		)	413,914
Deferred financing costs	(12,360		)	—			—			—			(12,360		)
Repayments of debt	—			(43,724		)	(3,877		)	35,000			(12,601		)
Borrowings under revolver	—			886,130			—			—			886,130
Repayments on revolver	—			(898,788		)	—			—			(898,788		)
Capital contributions received	—			15,270			70,008			(85,278		)	—
Intercompany dividends paid	—			(61,180		)	(39,550		)	100,730			—
Dividends and distributions on common stock	(167,328		)	—			—			—			(167,328		)
Distributions to non-controlling interest	—			—			(9,339		)	—			(9,339		)
Proceeds from exercise of Vector options	5,151			—			—			—			5,151
Tax benefit of options exercised	1,178			—			—			—			1,178
Net cash provided by (used in) financing activities	235,391			(62,128		)	17,242			15,452			205,957
Net increase (decrease) in cash and cash equivalents	60,409			(2,088		)	33,578			—			91,899
Cash and cash equivalents, beginning of year	151,342			11,812			71,312			—			234,466
Cash and cash equivalents, end of year	$	211,751		$	9,724		$	104,890		$	—		$	326,365

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2013
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Net cash provided by (used in) operating activities	$	71,730		$	115,829		$	(16,239	)	$	(119,294	)	$	52,026
Cash flows from investing activities:
Sale of investment securities	110,419			6,602			—			—			117,021
Maturities of investment securities	27			—			—			—			27
Purchase of investment securities	(159,463		)	(11,000		)	—			—			(170,463		)
Proceeds from sale or liquidation of long-term investments	10,847			—			80			—			10,927
Purchase of long-term investments	(5,000		)	(501		)	—			—			(5,501		)
Investments in real estate ventures	—			—			(75,731		)	—			(75,731		)
Distributions from investments in real estate ventures	—			—			3,142			—			3,142
Increase in cash surrender value of life insurance policies	(144		)	(484		)	—			—			(628		)
Decrease in restricted assets	3			1,078			—			—			1,081
Issuance of notes receivable	—			—			(8,600		)	—			(8,600		)
Proceeds from sale of fixed assets	35			13			—			—			48
Cash acquired in Douglas Elliman consolidation	—			—			116,935			—			116,935
Purchase of subsidiaries	—			—			(67,616		)	—			(67,616		)
Investments in subsidiaries	(155,961		)	—			—			155,961			—
Capital expenditures	(2,297		)	(9,784		)	(1,194		)	—			(13,275		)
Pay down of investment securities	681			—			—			—			681
Net cash used in investing activities	(200,853		)	(14,076		)	(32,984		)	155,961			(91,952		)
Cash flows from financing activities:
Proceeds from issuance of debt	450,000			4,687			3,080			—			457,767
Repayments of debt	(415,000		)	(7,466		)	(115		)	—			(422,581		)
Deferred financing charges	(11,750		)	—			—			—			(11,750		)
Borrowings under revolver	—			978,788			—			—			978,788
Repayments on revolver	—			(977,794		)	—			—			(977,794		)
Capital contributions received	—			13,950			142,011			(155,961		)	—
Intercompany dividends paid	—			(105,882		)	(13,412		)	119,294			—
Dividends and distributions on common stock	(144,711		)	—			—			—			(144,711		)
Distributions to non-controlling interest	—			—			(11,764		)	—			(11,764		)
Proceeds from exercise of Vector options	544			—			—			—			544
Tax benefit of options exercised	38			—			—			—			38
Net cash (used in) provided by financing activities	(120,879		)	(93,717		)	119,800			(36,667		)	(131,463		)
Net (decrease) increase in cash and cash equivalents	(250,002		)	8,036			70,577			—			(171,389		)
Cash and cash equivalents, beginning of year	401,344			3,776			735			—			405,855
Cash and cash equivalents, end of year	$	151,342		$	11,812		$	71,312		$	—		$	234,466