10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2016

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 August 5, 2016, Vector Group Ltd. had 123,754,768 shares of common stock outstanding.

VECTOR GROUP LTD.

FORM 10-Q

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	2
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and June 30, 2015	3
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and June 30, 2015	4
Condensed Consolidated Statements of Stockholders' Deficiency for the six months ended June 30, 2016	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and June 30, 2015	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	62
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	65
Item 6. Exhibits	66
SIGNATURE	67

1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	June 30, 2016			December 31, 2015
ASSETS:
Current assets:
Cash and cash equivalents	$	474,738		$	240,368
Investment securities available for sale	160,854			181,976
Accounts receivable - trade, net	25,076			23,889
Inventories	92,735			86,516
Income taxes receivable, net	218			2,841
Restricted assets	9,437			9,195
Other current assets	40,163			38,954
Total current assets	803,221			583,739
Property, plant and equipment, net	71,904			75,632
Investments in real estate, net	23,328			23,318
Long-term investments	59,369			62,726
Investments in real estate ventures	206,139			217,168
Restricted assets	9,386			12,303
Goodwill and other intangible assets, net	262,866			263,959
Prepaid pension costs	21,302			20,650
Other assets	21,985			21,120
Total assets	$	1,479,500		$	1,280,615
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	16,615		$	8,919
Current payments due under the Master Settlement Agreement	56,972			29,241
Current portion of employee benefits	914			915
Income taxes payable, net	—			96
Litigation accruals	3,514			22,904
Other current liabilities	140,388			154,217
Total current liabilities	218,403			216,292
Notes payable, long-term debt and other obligations, less current portion	1,110,731			856,108
Fair value of derivatives embedded within convertible debt	126,932			144,042
Non-current employee benefits	55,308			55,055
Deferred income taxes, net	87,914			79,429
Payments due under the Master Settlement Agreement	22,257			20,094
Litigation accruals	22,619			24,718
Other liabilities	10,772			7,038
Total liabilities	1,654,936			1,402,776
Commitments and contingencies (Note 7)
Stockholders' deficiency:
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized	—			—
Common stock, par value $0.10 per share, 250,000,000 shares authorized, 123,842,329 and 123,792,329 shares issued and outstanding	12,384			12,379
Accumulated deficit	(261,370		)	(210,113		)
Accumulated other comprehensive income	(8,539		)	(8,313		)
Total Vector Group Ltd. stockholders' deficiency	(257,525		)	(206,047		)
Non-controlling interest	82,089			83,886
Total stockholders' deficiency	(175,436		)	(122,161		)
Total liabilities and stockholders' deficiency	$	1,479,500		$	1,280,615

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

2

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Revenues:
Tobacco*	$	255,498		$	254,890		$	476,513		$	482,975
Real estate	182,765			161,022			342,512			293,278
E-Cigarettes	10			261			48			680
Total revenues	438,273			416,173			819,073			776,933
Expenses:
Cost of sales:
Tobacco*	168,607			174,867			305,345			331,897
Real estate	115,017			103,870			214,695			188,228
E-Cigarettes	7			467			13			1,097
Total cost of sales	283,631			279,204			520,053			521,222
Operating, selling, administrative and general expenses	83,922			79,916			163,750			154,097
Litigation settlement and judgment expense	—			1,250			2,350			2,093
Restructuring charges	—			—			41			—
Operating income	70,720			55,803			132,879			99,521
Other income (expenses):
Interest expense	(36,369		)	(31,761		)	(67,089		)	(63,507		)
Change in fair value of derivatives embedded within convertible debt	7,416			5,256			17,110			11,716
Equity in earnings from real estate ventures	2,813			1,856			2,306			2,194
Equity in earnings (losses) from investments	1,089			(2,163		)	(582		)	(1,551		)
Gain (loss) on sale of investment securities available for sale	139			(190		)	706			12,839
Impairment of investment securities available for sale	(49		)	—			(4,862		)	—
Other, net	581			1,821			1,628			3,758
Income before provision for income taxes	46,340			30,622			82,096			64,970
Income tax expense	19,003			11,178			33,366			24,045
Net income	27,337			19,444			48,730			40,925
Net income attributed to non-controlling interest	(3,322		)	(1,837		)	(5,377		)	(2,097		)
Net income attributed to Vector Group Ltd.	$	24,015		$	17,607		$	43,353		$	38,828
Per basic common share:
Net income applicable to common shares attributed to Vector Group Ltd.	$	0.20		$	0.14		$	0.36		$	0.32
Per diluted common share:
Net income applicable to common shares attributed to Vector Group Ltd.	$	0.20		$	0.14		$	0.35		$	0.32
Dividends declared per share	$	0.40		$	0.38		$	0.80		$	0.76

* Revenues and cost of sales include federal excise taxes of $106,861, $108,912, $197,707 and $206,271, respectively.

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

3

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income	$	27,337		$	19,444		$	48,730		$	40,925
Net unrealized losses on investment securities available for sale:
Change in net unrealized (losses) gains	(820		)	(4,493		)	(5,454		)	16,417
Net unrealized (gains) losses reclassified into net income	(90		)	190			4,156			(12,839		)
Net unrealized (losses) gains on investment securities available for sale	(910		)	(4,303		)	(1,298		)	3,578
Net unrealized gains on long-term investments accounted for under the equity method:
Change in net unrealized gains	—			1,176			—			1,190
Net unrealized losses reclassified into net income	—			1,624			—			1,624
Net unrealized gains on long-term investments accounted for under the equity method	—			2,800			—			2,814
Net change in forward contracts	9			16			18			32
Net change in pension-related amounts
Net loss arising during the year	—			1,607			—			1,607
Amortization of loss	445			254			890			521
Net change in pension-related amounts	445			1,861			890			2,128
Other comprehensive (loss) income	(456		)	374			(390		)	8,552
Income tax effect on:
Change in net unrealized (losses) gains on investment securities	337			1,857			2,245			(6,603		)
Net unrealized losses (gains) reclassified into net income on investment securities	37			(78		)	(1,708		)	5,309
Change in unrealized gains on long-term investments accounted for under the equity method	—			(478		)	—			(484		)
Net unrealized losses reclassified into net income on long-term investments accounted for under the equity method	—			(672		)	—			(672		)
Forward contracts	(4		)	(7		)	(7		)	(13		)
Pension-related amounts	(183		)	(769		)	(366		)	(880		)
Income tax benefit (provision) on other comprehensive income	187			(147		)	164			(3,343		)
Other comprehensive (loss) income, net of tax	(269		)	227			(226		)	5,209
Comprehensive income	27,068			19,671			48,504			46,134
Comprehensive income attributed to non-controlling interest	(3,322		)	(1,837		)	(5,377		)	(2,097		)
Comprehensive income attributed to Vector Group Ltd.	$	23,746		$	17,834		$	43,127		$	44,037

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

4

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Vector Group Ltd. Stockholders' Deficiency
				Additional						Accumulated Other
	Common Stock			Paid-In			Accumulated			Comprehensive			Non-controlling
	Shares	Amount		Capital			Deficit			Income			Interest			Total
Balance, January 1, 2016	123,792,329	$	12,379	$	—		$	(210,113	)	$	(8,313	)	$	83,886		$	(122,161	)
Net income	—	—		—			43,353			—			5,377			48,730
Total other comprehensive loss	—	—		—			—			(226		)	—			(226		)
Total comprehensive income	—	—		—			—			—			—			48,504
Distributions and dividends on common stock	—	—		(4,833		)	(94,610		)	—			—			(99,443		)
Restricted stock grant	50,000	5		(5		)	—			—			—			—
Stock-based compensation	—	—		4,838			—			—			—			4,838
Contributions from non-controlling interest	—	—		—			—			—			248			248
Distributions to non-controlling interest	—	—		—			—			—			(7,422		)	(7,422		)
Balance as of June 30, 2016	123,842,329	$	12,384	$	—		$	(261,370	)	$	(8,539	)	$	82,089		$	(175,436	)

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

5

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Six Months Ended			Six Months Ended
	June 30, 2016			June 30, 2015
Net cash provided by operating activities	$	78,825		$	83,885
Cash flows from investing activities:
Sale of investment securities	67,033			118,261
Maturities of investment securities	343			1,737
Purchase of investment securities	(56,691		)	(113,595		)
Proceeds from sale or liquidation of long-term investments	1,000			1,254
Purchase of long-term investments	(50		)	(5,000		)
Investments in real estate ventures	(11,806		)	(34,857		)
Distributions from investments in real estate ventures	17,983			—
Increase in cash surrender value of life insurance policies	(393		)	(1,118		)
Decrease (increase) in restricted assets	2,674			(7,934		)
Issuance of notes receivable	—			(4,410		)
Proceeds from sale of fixed assets	5			3
Capital expenditures	(7,615		)	(5,379		)
Pay downs of investment securities	4,926			3,530
Proceeds from sale of preferred securities	—			1,000
Investments in real estate, net	(81		)	(12,502		)
Net cash provided by (used in) investing activities	17,328			(59,010		)
Cash flows from financing activities:
Proceeds from issuance of debt	243,282			22
Deferred financing costs	(6,600		)	(625		)
Repayments of debt	(2,917		)	(3,374		)
Borrowings under revolver	89,695			126,727
Repayments on revolver	(80,223		)	(144,492		)
Dividends and distributions on common stock	(97,846		)	(92,778		)
Contributions from non-controlling interest	248			—
Distributions to non-controlling interest	(7,422		)	—
Proceeds from exercise of Vector options	—			1,219
Tax benefit of options exercised	—			384
Net cash provided by (used in) financing activities	138,217			(112,917		)
Net increase (decrease) in cash and cash equivalents	234,370			(88,042		)
Cash and cash equivalents, beginning of period	240,368			326,365
Cash and cash equivalents, end of period	$	474,738		$	238,323

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 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, 2015 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, 2015 Consolidated Balance Sheet. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest” (“ASU 2015-03”), which requires debt issuance costs to be reported in the balance sheet as a direct deduction from the face amount of the note. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015. This amendment must be applied retrospectively to all periods presented. The Company adopted the provisions of this ASU retrospectively in the first quarter of 2016, and adjusted all prior periods accordingly. The adoption of this ASU will simplify the presentation of debt issuance costs and reduce complexity without decreasing the usefulness of information provided to users of financial statements. 

7

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The cumulative impacts of the application of the new ASU are presented in the table below:

	December 31, 2015
	As Previously Reported			ASU Adoption			As Revised
Other assets	$	51,261		$	(30,141	)	$	21,120
Total assets	$	1,310,756		$	(30,141	)	$	1,280,615
Notes payable, long-term debt and other obligations, less current portion	$	886,249		$	(30,141	)	$	856,108
Total liabilities	1,432,917			(30,141		)	1,402,776
Total stockholders' deficiency	(122,161		)	—			(122,161		)
Total liabilities and stockholders' deficiency	$	1,310,756		$	(30,141	)	$	1,280,615

Adoption of Equity Method. The Company adopted the equity method of accounting for its investments in Ladenburg Thalmann Financial Services Inc. (“LTS”) and Castle Brands Inc. (“Castle”) in 2015 because the Company determined that it had significant influence due to the evolution of the relationships with each company. In accordance with ASC 323-35-33, the Company has adjusted its condensed consolidated financial statements, retrospectively, on a step-by-step basis as if the equity method had been in effect since inception.

The cumulative impact of the retrospective application of the equity method of accounting for the two investments are presented in the table below:

8

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Three Months Ended									Six Months Ended
	June 30, 2015									June 30, 2015
	As Previously Reported			Revision			As Revised			As Previously Reported			Revision			As Revised
Operating, selling, administrative and general expenses	$	79,679		$	237		$	79,916		$	153,623		$	474		$	154,097
Operating income	56,040			(237		)	55,803			99,995			(474		)	99,521
Equity in losses from investments	(1,657		)	(506		)	(2,163		)	(1,694		)	143			(1,551		)
Other, net	1,525			296			1,821			3,421			337			3,758
Income before provision for income taxes	31,069			(447		)	30,622			64,964			6			64,970
Income tax expense	11,364			(186		)	11,178			24,043			2			24,045
Net income	19,705			(261		)	19,444			40,921			4			40,925
Net income attributed to Vector Group Ltd.	17,868			(261		)	17,607			38,824			4			38,828
Other comprehensive (loss) income, net of tax	(2,781		)	3,008			227			(782		)	5,991			5,209
Comprehensive income	16,924			2,747			19,671			40,139			5,995			46,134
Comprehensive income attributed to Vector Group Ltd.	$	15,087		$	2,747		$	17,834		$	38,042		$	5,995		$	44,037

(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 to the extent paid-in-capital is available. The Company’s stock dividends are recorded as stock splits and given retroactive effect to earnings per share for all periods presented.

(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 (e.g. federal excise taxes). 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 brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commission expenses are recognized concurrently with related revenues.

9

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Property management fees and rental commissions earned are recorded as revenue when the related services are performed and the earnings process is complete.

(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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income attributed to Vector Group Ltd.	$	24,015		$	17,607		$	43,353		$	38,828
Income attributed to participating securities	(784		)	(521		)	(1,417		)	(1,151		)
Net income available to common shares attributed to Vector Group Ltd.	$	23,231		$	17,086		$	41,936		$	37,677

Basic and diluted EPS were calculated using the following common shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Weighted-average shares for basic EPS	118,065,857	117,954,708	118,062,358	117,475,380
Plus incremental shares related to stock options and non-vested restricted stock	236,348	209,067	215,386	205,262
Weighted-average shares for diluted EPS	118,302,205	118,163,775	118,277,744	117,680,642

The following were outstanding during the three and six months ended June 30, 2016 and 2015, but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		24,895,477		24,895,477		25,334,835
Weighted-average conversion price	$	19.63	$	19.63	$	19.63	$	19.48

10

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

The Company has estimated the fair value of the embedded derivatives based principally on the results of a valuation model. A readily determinable fair value of the embedded derivatives is not available. 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. 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. At June 30, 2016, the range of estimated fair values of the Company's embedded derivatives was between $125,983 and $127,870. The Company recorded the fair value of its embedded derivatives at the approximate midpoint of the range at $126,932 as of June 30, 2016. At December 31, 2015, the range of estimated fair values of the Company's embedded derivatives was between $143,422 and $144,660. The Company recorded the fair value of its embedded derivatives at the midpoint of the range at $144,042 as of December 31, 2015. The estimated fair 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 investment in real estate ventures are subject to evaluation under ASU No. 2015-02, “Consolidation” (“ASU 2015-02”) which requires all legal entities to be evaluated as either a voting interest entity or a Variable Interest Entities (“VIE”). The guidance is effective for financial statements of public companies issued for fiscal years beginning after December 15, 2015. The Company has followed the decision tree set forth in ASC 810-10-05-6 in analyzing each of its investments in real estate ventures. The Company examines specific criteria and uses judgment when determining if the real estate venture is a VIE and then if the Company is the primary beneficiary of a VIE. Factors considered in the qualification of a VIE include sufficient equity investment at risk, disproportionate voting rights and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights, and characteristics of a controlling financial interest.

Accounting guidance requires the Company to perform the VIE primary-beneficiary assessment for entities determined to be VIEs. The Company is required to consolidate all VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that a reporting entity 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 affect the VIE's economic performance and (b) the obligation to absorb losses or the right to receive residual returns of 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					Six Months Ended
	June 30,					June 30,
	2016			2015		2016			2015
Interest and dividend income	$	1,452		$	1,795	$	2,776		$	3,535
Gain on long-term investment	—			24		—			224
Impairment of long-term investments	(921		)	—		(1,203		)	—
Other income (expense)	50			2		55			(1		)
Other income, net	$	581		$	1,821	$	1,628		$	3,758

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Unaudited

(h) Other Current Liabilities:

Other current liabilities consisted of:

	June 30, 2016		December 31, 2015
Accounts payable	$	10,265	$	19,639
Accrued promotional expenses	22,269		24,816
Accrued excise and payroll taxes payable, net	16,784		26,556
Accrued interest	35,028		28,147
Commissions payable	9,885		11,008
Accrued salary and benefits	18,179		22,774
Other current liabilities	27,978		21,277
Total other current liabilities	$	140,388	$	154,217

(i) Goodwill and Other Intangible Assets:

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

	June 30, 2016		December 31, 2015
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	4,564		5,657
Total goodwill and other intangible assets, net	$	262,866	$	263,959

(j) Commitments:

Douglas Elliman Lease Extension.On March 31, 2016, Douglas Elliman extended the duration of an existing lease and entered into a sublease for additional space in New York. The agreement extended the lease term from 2018 to 2032. The new agreements increase the Company’s lease commitments by $0 in 2016, $1,164 in 2017, $1,412 in 2018, $3,733 in 2019, $5,394 in 2020 and $69,460 thereafter.

(k) New Accounting Pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies U.S. Generally Accepted Accounting Principles (“GAAP”) by requiring the following, among others: (1) all excess tax benefits and tax deficiencies are to be recognized as income tax expense or benefit on the income statement (excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period); (2) excess tax benefits are to be classified along with other income tax cash flows as an operating activity in the statement of cash flows; (3) in the area of forfeitures, an entity can still follow the current U.S. GAAP practice of making an entity-wide accounting policy election

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Unaudited

to estimate the number of awards that are expected to vest or may instead account for forfeitures when they occur; and (4) classification as a financing activity in the statement of cash flows of cash paid by an employer to the taxing authorities when directly withholding shares for tax withholding purposes. ASU 2016-09 is effective for the Company's fiscal year beginning January 1, 2017, including interim periods. Early application is permitted. The Company is currently assessing the impact the adoption of ASU 2016-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 does not change the core principle of the guidance stated in ASU 2014-09, instead, the amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. ASU 2016-08 will have the same effective date and transition requirements as the new revenue standard issued in ASU 2014-09. The Company is currently evaluating the method and impact the adoption of this ASU and ASU 2014-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 will be effective for the Company’s fiscal year beginning January 1, 2017 and subsequent interim periods. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) (“ASU 2016-06”). ASU 2016-06 clarifies the requirement for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under ASU 2016-06 is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. The amendments in ASU 2016-06 are effective for the Company's fiscal year beginning January 1, 2017, including interim periods. The Company is currently evaluating the method and impact the adoption of this ASU 2016-06 will have on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current U.S. GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning January 1, 2019 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Company's condensed consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such these investments may be measured at cost. ASU 2016-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on the Company’s condensed 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, 2017, 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

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Unaudited

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 the Company's condensed consolidated financial statements.

2. INVENTORIES

Inventories consist of:

	June 30, 2016			December 31, 2015
Leaf tobacco	$	49,537		$	49,856
Other raw materials	3,586			3,578
Work-in-process	606			789
Finished goods	67,219			61,493
E-Cigarettes	67			80
Inventories at current cost	121,015			115,796
LIFO adjustments	(28,280		)	(29,280		)
	$	92,735		$	86,516

All of the Company's inventories at June 30, 2016 and December 31, 2015 are reported under the LIFO method. The $28,280 LIFO adjustment as of June 30, 2016 decreases the current cost of inventories by $18,863 for Leaf tobacco, $643 for Other raw materials, $33 for Work-in-Process, $8,736 for Finished goods and $5 for E-Cigarettes. The $29,280 LIFO adjustment as of December 31, 2015 decreased the current cost of inventories by $19,863 for Leaf tobacco, $643 for Other raw materials, $33 for Work-in-Process, $8,736 for Finished goods and $5 for E-Cigarettes.

Liggett enters into purchase commitments with third party providers 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 June 30, 2016, Liggett had tobacco purchase commitments of approximately $16,151. Liggett has a single source supply agreement for reduced ignition propensity cigarette paper through 2019.

The Company capitalizes the incremental prepaid cost of the MSA in ending inventory. Each period, 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 $15,865 and $15,796 at June 30, 2016 and December 31, 2015, respectively. Federal excise tax in inventory was $26,417 and $23,455 at June 30, 2016 and December 31, 2015.

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Unaudited

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at June 30, 2016 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	38,172	$	17,343	$	(206	)	$	55,309
Mutual funds invested in fixed income securities	20,307		211		—			20,518
Marketable debt securities	83,865		1,162		—			85,027
Total investment securities available for sale	$	142,344	$	18,716	$	(206	)	$	160,854

The components of investment securities available for sale at December 31, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	47,502	$	19,833	$	(62	)	$	67,273
Mutual funds invested in fixed income securities	20,126		—		(15		)	20,111
Marketable debt securities	94,540		52		—			94,592
Total investment securities available for sale	$	162,168	$	19,885	$	(77	)	$	181,976

The table below summarizes the maturity dates of marketable debt securities at June 30, 2016.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	27,456	$	—	$	27,456	$	—
Corporate securities	35,660		2,271		33,389		—
U.S. mortgage-backed securities	7,343		—		49		7,294
Commercial mortgage-backed securities	3,675		—		—		3,675
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		7,985		—		—
Index-linked U.S. bonds	793		—		793		—
Total marketable debt securities by maturity dates	$	85,027	$	10,256	$	63,802	$	10,969

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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
June 30, 2016
Marketable equity securities	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
December 31, 2015
Marketable equity securities	$	5,938	$	(62	)	$	—	$	—		$	5,938	$	(62	)
Mutual funds invested in fixed income securities	10,053		(15		)	—		—			10,053		(15		)
	$	15,991	$	(77	)	$	—	$	—		$	15,991	$	(77	)

Unrealized losses from mutual funds invested in fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses from equity 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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Gross realized gains on sales	$	206		$	520		$	955		$	14,084
Gross realized losses on sales	(67		)	(710		)	(249		)	(1,245		)
Gains (losses) on sale of investment securities available for sale	$	139		$	(190	)	$	706		$	12,839
Gross realized losses on other-than-temporary impairments	$	(49	)	$	—		$	(4,862	)	$	—

The Company recorded an “Other-than-temporary impairment” charge of $49 and $4,862 during the three and six months ended June 30, 2016. The largest component of the charge for the six months ended June 30, 2016 was $4,772 related to an investment in the common stock of 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.

Proceeds from investment securities sales totaled $67,033 and $118,261 and proceeds from early redemptions by issuers totaled $5,269 and $5,267 in the six months ended June 30, 2016 and 2015, respectively, mainly from sales of Corporate securities and U.S. Government securities.

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Unaudited

4. LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

	June 30, 2016		December 31, 2015
Investments accounted at cost	$	39,028	$	41,231
Investments accounted for under the equity method	20,341		21,495
	$	59,369	$	62,726

(a) Cost-Method Investments:

Long-term investments accounted for at cost consisted of the following:

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investments partnerships	$	38,527	$	41,522	$	40,730	$	44,217
Real estate partnership	501		504		501		552
	$	39,028	$	42,026	$	41,231	$	44,769

The principal business of the investment partnerships is investing in investment securities and real estate. The estimated fair value of the investment partnerships was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners. In the future, the Company may invest in other investments, including limited partnerships, real estate investments, equity securities, debt securities, derivatives and certificates of deposit, depending on risk factors and potential rates of return.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

The Company has accounted for these investments using the cost method of accounting because the investments did not meet the requirements for equity method accounting.

The Company received cash distributions of $1,000 and $371 from the Company's investments in long-term investments under the cost method for the six months ended June 30, 2016 and 2015, respectively. The Company invested $5,000 in a reinsurance company during the six months ended June 30, 2015.

The long-term investments are carried on the consolidated balance sheet at cost. The fair value determination disclosed above

would be classified as Level 3 under fair value hierarchy disclosed in Note 11 if such assets were recorded on the consolidated balance sheet at fair value. The fair value determinations disclosed above were based on company assumptions, and information obtained from the partnerships based on the indicated market values of the underlying assets of the investment portfolio.

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(b) Equity-Method Investments:

Long-term investments accounted for under the equity method consisted of the following:

	June 30, 2016		December 31, 2015
Indian Creek Investors LP	$	4,929	$	4,989
Boyar Value Fund	7,312		7,302
Ladenburg Thalmann Financial Services Inc.	8,100		9,204
Castle Brands, Inc.	—		—
	$	20,341	$	21,495

The Company's investments accounted for under the equity method include the following: Indian Creek Investors LP (“Indian Creek”), Boyar Value Fund (“Boyar”), Ladenburg Thalmann Financial Services Inc. (“LTS”) and Castle Brands Inc. (“Castle”). At June 30, 2016, the Company's ownership percentages in Indian Creek, Boyar, LTS and Castle were 20.13%, 30.65%, 7.75% and 7.91%, respectively. The Company accounted for its Indian Creek and Boyar interests as equity-method investments because the Company's ownership percentage meets the threshold for equity-method accounting. The Company accounted for its LTS and Castle interests as equity-method investments because, in accordance with generally accepted accounting principles, the Company has the ability to exercise significant influence over their operating and financial policies.

The principal business of Indian Creek is investing in investment securities. Fair value approximates carrying value. The estimated fair value of the investment partnership was provided by the partnership based on the indicated market values of the underlying assets or investment portfolio. The investment in the investment partnership is illiquid and the ultimate realization of the investment is subject to the performance of the underlying partnership and its management by the general partners.

The Company's investments under the equity method include an investment in Boyar. The value of the investment based on the quoted market price as of June 30, 2016 was $7,312, equal to its carrying value. Ladenburg Thalmann Fund Management, LLC, an indirect subsidiary of LTS, is the manager of Boyar.

At June 30, 2016, the aggregate values of the LTS and Castle investments based on the quoted market price were $33,491 and $9,250, respectively.

The Company received cash distributions of $572 and $1,754 from the Company's investments in long-term investments under the equity method for the six months ended June 30, 2016 and 2015, respectively. The Company recognized equity in earnings from long-term investments under the equity method of $1,089 for the three months ended June 30, 2016 and equity in losses from long-term investments under the equity method of $582 for the six months ended June 30, 2016. The Company recognized equity in losses from long-term investments under the equity method of $2,163 and $1,551 for the three and six months ended June 30, 2015, respectively. The Company has suspended its recognition of equity in losses from Castle to the extent such losses exceed its basis.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

5. NEW VALLEY LLC

Residential Brokerage Business. New Valley is engaged in the real estate business and is seeking to acquire or invest in additional real estate properties or projects.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.

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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:

	June 30, 2016		December 31, 2015
10 Madison Square Park (1107 Broadway)	$	9,188	$	11,391
The Marquand (11 East 68th Street)	9,333		13,900
11 Beach Street	13,702		13,209
20 Times Square (701 Seventh Avenue)	16,487		14,985
111 Murray Street	25,308		25,567
160 Leroy Street	4,511		3,952
215 Chrystie Street	5,729		5,592
The Dutch (25-19 43rd Avenue)	1,129		1,077
Queens Plaza (23-10 Queens Plaza South)	16,834		16,177
87 Park (8701 Collins Avenue)	8,846		8,658
125 Greenwich Street	9,780		9,750
West Hollywood Edition (9040 Sunset Boulevard)	7,050		10,510
76 Eleventh Avenue	18,867		17,967
Monad Terrace	7,774		6,608
Takanasee	4,916		4,680
Condominium and Mixed Use Development	159,454		164,023
Maryland Portfolio	—		—
ST Portfolio	9,193		15,754
Apartment Buildings	9,193		15,754
Park Lane Hotel	21,138		19,697
Hotel Taiwana	7,786		7,069
Coral Beach and Tennis Club	3,162		3,159
Hotels	32,086		29,925
The Plaza at Harmon Meadow	3,682		5,449
Commercial	3,682		5,449
Other	1,724		2,017
Investments in real estate ventures	$	206,139	$	217,168

Condominium and Mixed-Use Development:

Condominium and mixed-use development investments range in ownership percentage from 3.1% to 49.5%. New Valley recorded net equity in earnings from real estate ventures of $2,962 and $1,779 for the three and six months ended June 30, 2016 from its condominium and mixed-used developments. For the three months ended June 30, 2016 equity in earnings from real estate related to $3,788 in equity earnings from New Valley's proportionate share of the sale of condominium units at 10 Madison Square Park offset by equity in losses of $826 from the other condominiums and mixed-use development projects. For the six months ended June 30, 2016 equity in earnings from real estate was related to $4,211 in equity earnings from New Valley's proportionate share of the sale of condominium units at 10 Madison Square Park and $34 equity in earnings from other condominiums and

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

mixed-use development projects offset by equity losses of $962 at the Marquand, $160 at 11 Beach Street, $247 at 111 Murray Street, $144 at 215 Chrystie Street, $122 at Queens Plaza, $250 at 87 Park, $177 at West Hollywood Edition, and $404 at Monad Terrace. New Valley recorded equity in earnings from real estate ventures of $138 and $675 for the the three and six months ended June 30, 2015. The Company recorded $1,501 of equity in earnings related to its proportionate share of the Marquand’s equity earnings from the sale of three of its units for the six months ended June 30, 2015. The Company also recorded $236 of equity in earnings from Chelsea Eleven for a distribution of excess amounts held back in 2012 for final expenses of the investment for the six months ended June 30, 2015.

During the six months ended June 30, 2016, New Valley made capital contributions totaling $8,801 related to ventures where New Valley previously held an investment, primarily at 20 Times Square, 160 Leroy Street, West Hollywood Edition, 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 six months ended June 30, 2015, New Valley made capital contributions totaling $27,091 primarily related to 215 Chrystie Street, 76 Eleventh Avenue and Monad Terrace. 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.

During the six months ended June 30, 2016, New Valley received distributions of $19,985 primarily related to 10 Madison Square West, the Marquand, West Hollywood Edition and income from marketing fees paid by 125 Greenwich Street. During the six months ended June 30, 2015, New Valley received distributions of $236 from its investment in Chelsea Eleven, which sold its last unit in 2012, for excess amounts held back in 2012 for final expenses of the investment.

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 $140,667 at June 30, 2016.

New Valley capitalized $4,836 of interest expense into the carrying value of its ventures whose projects were currently under development during the six months endedJune 30, 2016.

Douglas Elliman has been engaged by the developers as the sole broker or the co-broker for several of the real estate development projects that New Valley owns an interest in through its joint venture investments. Douglas Elliman had gross commissions of approximately $5,674 and  $8,079 for the three and six months endedJune 30, 2016 from these projects.

Apartment Buildings:

Apartment building investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded equity in earnings from real estate ventures of $1,630 and $2,146 for the three and six months ended June 30, 2016, primarily related to the ST Portfolio apartment portfolio. In 2015, ST Portfolio sold one (Highgrove) of its two remaining Class A multi-family buildings. New Valley recorded equity in earnings from real estate ventures of $1,848 and $1,801 for the three and six months ended June 30, 2015, related to the ST Portfolio. In 2015, ST Portfolio sold one (Phoenix) of its three remaining Class A multi-family buildings. New Valley received distributions of $8,707 during the six months endedJune 30, 2016, primarily related to ST Portfolio and Maryland Portfolio. New Valley received distributions of $493 during the six months ended June 30, 2015, primarily related to the Maryland Portfolio. New Valley has suspended its recognition of equity losses in Maryland Portfolio to the extent such losses exceed its basis. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $9,193 at June 30, 2016.

Hotels:

Hotel investments range in ownership percentage from 5.2% to 49.0%. New Valley recorded equity in losses from real estate ventures of $189 and $844 for the three and six months ended June 30, 2016, related to hotel operations. New Valley recorded equity in losses from real estate ventures of $261 and $1,006 for the three and six months ended June 30, 2015. New Valley made capital contributions totaling $3,005 for the six months ended June 30, 2016, related to the Park Lane Hotel and Coral Beach and Tennis Club. New Valley made capital contributions totaling $1,980 for the six months ended June 30, 2015, related to the Park Lane Hotel and Coral Beach and Tennis Club. New Valley's maximum exposure to loss as a result of its investments in hotels was $32,086 at June 30, 2016.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Commercial:

New Valley recorded equity in losses from real estate ventures of $1,744 and $1,532 for the three and six months ended June 30, 2016, related to shopping center rental operations. New Valley recorded equity in earnings from real estate ventures of $27 for the three and six months ended June 30, 2015, related to shopping center rental operations. New Valley received distributions totaling $235 for the six months ended June 30, 2016, related to Harmon Meadow. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $3,682 at June 30, 2016.

Other:

Other investments in real estate ventures relate to a 50% investment in an insurance consulting company owned by Douglas Elliman.

Investments in Real Estate, net:

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

	June 30, 2016		December 31, 2015
Escena, net	$	10,644	$	10,716
Sagaponack	12,684		12,602
Investments in real estate, net	$	23,328	$	23,318

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

	June 30, 2016			December 31, 2015
Land and land improvements	$	8,907		$	8,907
Building and building improvements	1,874			1,875
Other	2,001			1,923
	12,782			12,705
Less accumulated depreciation	(2,138		)	(1,989		)
	$	10,644		$	10,716

New Valley recorded operating losses of $299 and $173 for the three months ended June 30, 2016 and 2015, respectively, from Escena. New Valley recorded operating income of and $209 and $552 for the six months ended June 30, 2016 and 2015, respectively, from Escena.

Investment in Sagaponack. In April 2015, New Valley 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 condensed consolidated financial statements of the Company. As of June 30, 2016, the assets of Sagaponack consisted of land and land improvements of $12,684.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

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

	June 30, 2016			December 31, 2015
Vector:
7.75% Senior Secured Notes due 2021, including premium of $15,391 and $8,014	$	850,391		$	608,014
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $121,788 and $132,119*	108,212			97,881
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $79,010 and $86,136*	179,740			172,614
Liggett:
Revolving credit facility	12,808			3,213
Term loan under credit facility	3,147			3,269
Equipment loans	6,866			9,716
Other	354			461
Notes payable, long-term debt and other obligations	1,161,518			895,168
Less:
Debt issuance costs	(34,172		)	(30,141		)
Total notes payable, long-term debt and other obligations	1,127,346			865,027
Less:
Current maturities	(16,615		)	(8,919		)
Amount due after one year	$	1,110,731		$	856,108

______________________

* The fair value of the derivatives embedded within the 7.5% Variable Interest Senior Convertible Notes ($61,998 at June 30, 2016 and $72,083 at December 31, 2015, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($64,934 at June 30, 2016 and $71,959 at December 31, 2015, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

7.75% Senior Secured Notes due 2021 - Vector:

On May 9, 2016, the Company completed the sale of an additional $235,000 principal amount of its 7.75% Senior Secured Notes due 2021 for a price of 103.50% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933 (the "Securities Act"). The Company received net proceeds of approximately $236,900 after deducting underwriting discounts, commissions, fees and offering expenses. The net proceeds will be used for general corporate purposes, including for additional investments in real estate and in the Company's tobacco business. The Company will amortize the deferred costs and debt premium related to the additional Senior Secured Notes over the estimated remaining life of the debt.

In August 2016, the Company completed an offer to exchange the 7.75% Senior Secured Notes issued in May 2016 for an equal amount of newly issued 7.75% Senior Secured Notes due 2021. The new 7.75% Senior Secured Notes have substantially the same terms as the original notes, except that the new 7.75% Senior Secured Notes have been registered under the Securities Act.

6.75% Variable Interest Senior Convertible Note due 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.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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

As of June 30, 2016, a total of $15,955 was outstanding under the revolving and term loan portions of the credit facility. Availability, as determined under the facility, was approximately $44,000 based on eligible collateral at June 30, 2016.

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

The conversion rates for all convertible debt outstanding as of June 30, 2016 and December 31, 2015, are summarized below:

	June 30, 2016			December 31, 2015
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
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				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Amortization of debt discount, net	$	8,653	$	6,213	$	16,609	$	11,840
Amortization of debt issuance costs	1,401		1,022		2,569		1,988
	$	10,054	$	7,235	$	19,178	$	13,828

Fair Value of Notes Payable and Long-Term Debt:

	June 30, 2016					December 31, 2015
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	1,161,518	(1)	$	1,513,012	$	895,168	(1)	$	1,297,875

______________________

⁽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. The Company used the quoted market prices as of June 30, 2016 to determine the fair value of its publicly-traded notes and debentures. The carrying value of the credit facility and term loan is equal to the fair value. The fair value of the equipment loans and other obligations was determined by calculating the present value of the required future cash flows. 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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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 June 30, 2016 and 2015, Liggett incurred tobacco product liability legal expenses and costs totaling $1,707 and $3,158, respectively. For the six months ended June 30, 2016 and 2015, Liggett incurred tobacco product liability legal expenses and costs totaling $5,878 and $5,713, respectively. The tobacco product liability legal expenses and 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 the probability of a loss being incurred and 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 of the Putney, Calloway, Boatright, Buchanan and Ward cases Liggett, as of June 30, 2016, had secured approximately $10,767 in bonds.

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 but in any event, the maximum amount of any such bond for an appeal in the Florida state courts will be no greater than $5,000. 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 more than 100Engle progeny cases. A number of the judgments have been affirmed on appeal and satisfied by the defendants. As of June 30, 2016, 24Engle 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 nine in favor of Liggett. In four of the cases, punitive damages were awarded against Liggett (although in Calloway, the punitive damages award was reversed and remanded to the trial court). 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

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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, under certain circumstances, Liggett may have to pay more than its proportionate share of any bonding or judgment related amounts. Several of the judgments against Liggett remain on appeal. Except as discussed in this Note 7 regarding the cases where an adverse verdict against Liggett remains 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, however, Liggett has entered into settlement discussions in individual cases or groups of cases, where Liggett has determined it was in its best interest to do so, and it may continue to do so in the future, including with respect to the remaining Engle progeny cases. In October 2013, Liggett announced a settlement of the claims of over 4,900Engle progeny plaintiffs (see Engle Progeny Settlement below). As of June 30, 2016, Liggett (and in certain cases the Company) had, on an individual basis, settled 175Engle progeny cases for approximately $5,999 in the aggregate. One of those settlements occurred in the second quarter of 2016.

Individual Actions

As of June 30, 2016, there were 38 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 the remaining Engle progeny cases or the 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
Maryland	13
Florida	11
New York	7
Louisiana	3
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.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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, including the claims of all plaintiffs with cases pending in federal court, 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 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 245 plaintiffs’ claims remain pending in state court. 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 June 30, 2016, 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. Both sides sought discretionary review from the Florida Supreme Court. In February 2016, the Florida Supreme Court reinstated the jury's verdict. The defendants moved for clarification of that order, which was granted in March 2016. The court clarified that it reversed the district court's decision regarding the statute of repose only, leaving the remaining portions of the decision intact. The case will be remanded to the trial court for proceedings consistent with those portions of the district court's decision that were not reversed.
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 merits judgment. Subsequently, the trial court entered a joint and several final judgment on attorneys' fees and costs for $981 and defendants appealed that judgment.
May 2012	Calloway v. R.J. Reynolds	Broward	1,530	—	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. On January 6, 2016, the Fourth District Court of Appeal reversed in part, including the $7,600 punitive damages award against Liggett, and remanded the case to the trial court for a new trial on certain issues. Both sides have moved for rehearing.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	Liggett satisfied the judgment and the case is concluded.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	—	—	In May 2013, the jury awarded compensatory damages in the amount of $2,055 and apportioned 10% of the fault to Liggett ($205). Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed and defendants cross-appealed. Oral argument occurred on June 7, 2016. A decision is pending.
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	—	—	In August 2014, the jury awarded compensatory damages in the amount of $3,123 and apportioned 1% of the fault to Liggett ($31). In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	Liggett satisfied the judgment and the case is concluded.
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. Defendants appealed and plaintiff cross-appealed.
June 2015	Caprio v. R.J. Reynolds	Broward	—	—	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The jury returned a verdict of $559 in economic damages. The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  Defendants appealed.
Total Damages Awarded:			28,866	10,800
Amounts accrued, paid or compromised:			(24,328)	(10,500)
Damages remaining on Appeal:			$4,538	$300
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault and only include Liggett's jury allocated share, regardless of whether a judgment was joint and several. 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.

27

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Through June 30, 2016, Liggett paid $39,773, including interest and attorneys' fees, to satisfy the judgments in the following Engle progeny cases: Lukacs, Campbell, Douglas, Clay,Tullo, Ward, Rizzuto, Lambert and Buchanan.

The Company’s current potential range of loss in the remaining cases on appeal is between $0 and $4,838 in the aggregate, plus interest and attorneys' fees, however, this is only an estimate and final damages in any case might increase as a result of pending appeals. 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. 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 Rey, 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 Douglas, a state court case, 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 state court case, in April 2015, 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, a federal case,the Eleventh Circuit held that federal law impliedly preempts use of the res judicataEngle findings to establish claims for strict liability or negligence. In February 2016, the Eleventh Circuit Court of Appeals vacated the panel’s opinion and granted Plaintiff’s motion for rehearing en banc.  Defendants filed a motion requesting that the court enter a briefing order directing the parties to address both implied preemption and whether the application of the Engle findings violates federal due process.  That motion was granted. Oral argument occurred in June 2016 and a decision is pending.

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Unaudited

Maryland Cases

Liggett is currently a defendant in 13 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. On May 9, 2016, the Court of Appeals for Maryland (Maryland's highest court) heard oral argument on the appeal of the intermediate appellate court's decision. On July 5, 2016, the Court of Appeals ruled that joinder of tobacco and asbestos cases may be possible in certain circumstances, but plaintiffs must demonstrate at the trial court level how such cases may be joined while providing appropriate safeguards to prevent embarrassment, delay, expense or prejudice to defendants and "the extent to which, if at all, the special procedures applicable to asbestos cases should extend to tobacco companies." Other than providing guidance, the Court of Appeals remanded these issues to be determined at the trial court level. It is possible that Liggett and other tobacco company defendants will not be dismissed from pending synergy exposure cases, and may be named as defendants 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 November 2015, in Hausrath (NY state court), the court entered a case management order providing discovery deadlines. A status conference is scheduled for August 2, 2016. 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 June 30, 2016, 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.

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

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Unaudited

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 date for the consolidated trials for January 9, 2017. 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. On May 23, 2016, the trial court ruled that the case may proceed against Liggett. Liggett intends to seek appellate review of this decision.It is estimated that Liggett could be a defendant in approximately 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 June 30, 2016, 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

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Unaudited

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. In May 2015, the court of appeals issued an opinion on the legality of the "corrective statements," affirming them in part and reversing them in part. The implementation of the “corrective statements” is uncertain as proceedings are ongoing.

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

Upcoming Trials

As of June 30, 2016, there were 16 Engle progeny cases and two Individual Actions scheduled for trial through June 30, 2017, where Liggett (and/or the Company) is a named defendant. Trial dates are, however, subject to change.

MSA and Other State Settlement Agreements

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

In November 1998, Philip Morris, R.J. Reynolds and two other companies (the “Original Participating Manufacturers” or “OPMs”) and Liggett and Vector Tobacco (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 and Vector Tobacco 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.

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 including a "Non-Participating Manufacturers Adjustment" or "NPM Adjustment"). These annual payments are allocated based on unit volume of domestic cigarette shipments. The payment obligations under the MSA are the several, and not joint, obligation of each Participating Manufacturer and are not the responsibility of any parent or affiliate of a Participating Manufacturer.

Liggett has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 1.65% of total cigarettes sold in the United States. Vector Tobacco has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 0.28% of total cigarettes sold in the United States. Liggett and Vector Tobacco’s domestic shipments accounted for 3.3% of the total cigarettes sold in the United States in 2015. 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 30, 2015, Liggett and Vector Tobacco pre-paid $100,000 of their approximate$115,000 2015 MSA obligation, the balance of which was paid in April 2016.

Certain MSA Disputes

NPM Adjustment.  Liggett and Vector Tobacco contend that they are entitled to an NPM Adjustment for each year from 2003 - 2015. The NPM Adjustment is a potential adjustment to annual MSA payments, available when the Participating Manufacturers suffer a market share loss to NPMs for a particular year and an economic consulting firm selected pursuant to the MSA determines that the MSA was a “significant factor contributing to” that loss. A Settling State that has “diligently enforced” its qualifying escrow statute in the year in question may be able to avoid its allocable share of the NPM Adjustment. For 2003 - 2015, 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 either paid subject to dispute, withheld payment or paid into a disputed payment account, the amounts associated with these NPM Adjustments.

The two requirements for application of the NPM Adjustment, a market share loss and a finding or agreement that the MSA was a significant factor in that loss, have been satisfied, and the Participating Manufacturers are engaged in disputes with certain of the Settling States over whether they diligently enforced their respective escrow statutes in each of the years from 2003 - 2014. After several years of litigation over whether the MSA’s arbitration clause required a multistate arbitration of the NPM Adjustment dispute, 48 of 49 state courts ultimately compelled the states to participate in a single, multistate arbitration of the 2003 NPM Adjustment. Notwithstanding, many states continued to refuse to arbitrate and agreed to do so only after the Participating Manufacturers agreed to a 20% reduction in their 2003 NPM Adjustment claims.

The arbitration for the 2003 NPM Adjustment began in June 2010. During the proceedings, the Participating Manufacturers decided not to contest the diligent enforcement of 16 states, with a combined allocable share of approximately 14%.

While the 2003 arbitration was underway, the Participating Manufacturers entered into a term sheet with 22 states settling the NPM Adjustment for 2003 - 2012 and agreeing to terms to address the NPM Adjustment with respect to those states for future years. The parties have been working towards converting the term sheet into a final settlement agreement.

The Participating Manufacturers continued to contest the diligence of 15 states relating to the 2003 NPM Adjustment. In September 2013, the panel found that six of those states did not diligently enforce their MSA escrow statutes in 2003.

Two of the states found non-diligent, Kentucky and Indiana, agreed to settle the dispute and enter into the term sheet described above.

The remaining four non-diligent states pursued motions in their respective state courts seeking to vacate or reduce the amount of the arbitration award. The Pennsylvania and Maryland courts refused to vacate the award but reduced the recovery by approximately 50%. State court appellate proceedings in Pennsylvania and Maryland are now exhausted but the Participating Manufacturers have filed petitions for certiorari seeking further review in the United States Supreme Court. The remaining two challenges to the 2003 arbitration award, in Missouri and New Mexico, remain pending in state court. In Missouri, the appellate court reversed the trial court, which had reduced the arbitration award, and reinstated the full award. The Missouri Supreme Court granted a discretionary appeal of that decision, and briefing is currently underway. There has been no decision in New Mexico.     

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.

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Unaudited

As a result of the settlements and arbitration award described above, Liggett and Vector Tobacco reduced cost of sales in the aggregate by $22,356 for years 2013 - 2015. Liggett and Vector Tobacco maybe entitled to further adjustments for 2015 forward. The remaining NPM Adjustment accrual of approximately $20,000 at June 30, 2016 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. As of June 30, 2016, there remains approximately $28,600 in the disputed payments account relating to Liggett's 2011 - 2015 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. The dispute over the NPM Adjustment for 2015 remains to be arbitrated with all the states. The arbitration panel for the 2004 NPM Adjustment dispute has been selected and that proceeding has commenced.

“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 owed approximately $16,000 for years 2001 - 2013. In June 2016, the independent auditor issued revised calculations indicating that Liggett owed approximately $8,100 for years 2001 - 2013. Based on these revised calculations Liggett is fully accrued for this matter although Liggett continues to dispute the independent auditor’s calculation.

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 settlements with United States Tobacco Company, Liggett’s payment obligations to those four 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.

On January 12, 2016, the Attorney General for Mississippi commenced an action against Liggett in state court in Jackson County, Mississippi (Chancery Division) to enforce the settlement agreement among Liggett, Mississippi and several other states, alleging that Liggett is liable to Mississippi for at least $26,000 (including interest) plus attorneys' fees and punitive damages. Discovery is underway. Liggett may be required to make additional payments to Texas or Mississippi 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

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 six months ended June 30, 2016 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, 2016	$	29,241		$	22,904		$	52,145		$	20,094	$	24,718		$	44,812
Expenses	42,637			2,583			45,220			—		—			—
Change in MSA obligations capitalized as inventory	69			—			69			—		—			—
Payments	(12,847		)	(25,545		)	(38,392		)	—		—			—
Reclassification to/(from) non-current liabilities	(2,163		)	3,252			1,089			2,163		(3,252		)	(1,089		)
Interest on withholding	35			320			355			—		1,153			1,153
Balance as of June 30, 2016	$	56,972		$	3,514		$	60,486		$	22,257	$	22,619		$	44,876

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(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The activity in the Company's accruals for the MSA and tobacco litigation for the six months ended June 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	53,435			2,490			55,925			—		(195		)	(195		)
Change in MSA obligations capitalized as inventory	1,011			—			1,011			—		—			—
Payments	(18,142		)	(5,645		)	(23,787		)	—		—			—
Reclassification from non-current liabilities	—			3,305			3,305			—		(3,305		)	(3,305		)
Interest on withholding	—			178			178			—		1,244			1,244
Balance as of June 30, 2015	$	62,626		$	3,477		$	66,103		$	25,809	$	23,444		$	49,253

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 affect 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 Convenience Distribution 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. Under the agreement, Liggett Vector Brands has agreed to pay a portion of losses incurred by the surety under the bond program, with a maximum loss exposure of $500. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at June 30, 2016.

In addition to the foregoing, Douglas Elliman Realty, LLC is subject to numerous proceedings, lawsuits and claims in connection withitsordinary business activities. Many of these matters are covered by insurance.

Liggett was contacted in October 2015, by one of its software vendors, who suggested that Liggett needed to purchase additional software licenses from it.  Liggett believes that its use of the vendor's software is in compliance with the licenses previously purchased by Liggett.  In January 2016, the software vendor requested to audit Liggett’s use of the relevant software.  In response, Liggett has provided details of its use of the software and is continuing to cooperate with requests for information.

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

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8. EMPLOYEE BENEFIT PLANS

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

	Pension Benefits						Pension Benefits						Other Postretirement Benefits						Other Postretirement Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015
Service cost — benefits earned during the period	$	137		$	133		$	274		$	265		$	1		$	2		$	2		$	4
Interest cost on projected benefit obligation	1,355			1,280			2,710			2,598			97			93			194			185
Expected return on assets	(1,519		)	(1,888		)	(3,038		)	(3,813		)	—			—			—			—
Settlement loss	—			1,607			—			1,607			—			—			—			—
Amortization of net loss (gain)	464			278			928			569			(19		)	(24		)	(38		)	(48		)
Net expense	$	437		$	1,410		$	874		$	1,226		$	79		$	71		$	158		$	141

9. RESTRUCTURING

The following table presents the activity under the Tobacco segment restructuring plan for the six months ended June 30, 2016:

	Employee Severance and Benefits			Contract Termination/Exit Costs			Other			Total
Accrual balance as of January 1, 2016	$	422		$	48		$	20		$	490
Restructuring charges	—			41			—			41
Utilized	(315		)	(89		)	(20		)	(424		)
Accrual balance as of June 30, 2016	$	107		$	—		$	—		$	107

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					Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
Income before provision for income taxes	$	46,340	$	30,622		$	82,096	$	64,970
Income tax expense using estimated annual effective income tax rate	18,793		11,347			33,317		24,145
Changes in effective tax rates	210		(78		)	—		—
Impact of discrete items, net	—		(91		)	49		(100		)
Income tax expense	$	19,003	$	11,178		$	33,366	$	24,045

36

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The discrete item for the six months ended June 30, 2016 is primarily related to the results of recent state income tax audits. The discrete item for the six months ended June 30, 2015 is primarily related to the rate differential in other comprehensive income and the results of a recent state income tax audit.

11. INVESTMENTS AND FAIR VALUE MEASUREMENTS

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

	Fair Value Measurements as of June 30, 2016
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	336,845	$	336,845	$	—	$	—
Commercial paper	42,044		—		42,044		—
Certificates of deposit	2,976		—		2,976		—
Bonds	10,767		10,767		—		—
Investment securities available for sale
Equity securities	55,309		55,309		—		—
Mutual funds invested in fixed income securities	20,518		20,518		—		—
Fixed income securities
U.S. government securities	27,456		—		27,456		—
Corporate securities	35,660		—		35,660		—
U.S. government and federal agency	7,343		—		7,343		—
Commercial mortgage-backed securities	3,675		—		3,675		—
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		—		7,985		—
Index-linked U.S. bonds	793		—		793		—
Total fixed income securities	85,027		—		85,027		—
Total investment securities available for sale	160,854		75,827		85,027		—
Total	$	553,486	$	423,439	$	130,047	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	126,932	$	—	$	—	$	126,932
Nonrecurring fair value measurements
Long-term investments (1)	$	6,396					$	6,396	$	(1,203	)

(1) Long-term investments with a carrying amount of $7,599 were written down to their fair value of $6,396, resulting in an impairment charge of $1,203, which was included in earnings.

37

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

	Fair Value Measurements as of December 31, 2015
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	93,915	$	93,915	$	—	$	—
Certificates of deposit	3,469		—		3,469		—
Bonds	12,767		12,767		—		—
Investment securities available for sale
Equity securities	67,273		67,273		—		—
Mutual funds invested in fixed income securities	20,111		20,111		—		—
Fixed income securities
U.S. government securities	28,132		—		28,132		—
Corporate securities	41,561		—		41,561		—
U.S. government and federal agency	5,790		—		5,790		—
Commercial mortgage-backed securities	8,728		—		8,728		—
U.S. asset-backed securities	8,276		—		8,276		—
Index-linked U.S. bonds	2,105		—		2,105		—
Total fixed income securities	94,592		—		94,592		—
Total investment securities available for sale	181,976		87,384		94,592		—
Total	$	292,127	$	194,066	$	98,061	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	144,042	$	—	$	—	$	144,042
Nonrecurring fair value measurements
Long-term investments (1)	$	11,189					$	11,189	$	(811	)
Investments in real estate, net (2)	3,780						3,780		(230		)
	$	14,969					$	14,969	$	(1,041	)

(1) Long-term investments with a carrying amount of $12,000 were written down to their fair value of $11,189, resulting in an impairment charge of $811, which was included in earnings.

(2) Investment in real estate, net with a carrying value of $4,010 was written down to its fair value of $3,780, resulting in an impairment charge of $230, which was included in earnings.

The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution. The fair value of investment securities available for sale included in Level 1 are

38

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

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 credit spread 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 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 unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at June 30, 2016:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2016		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	126,932	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.42
				Convertible trading price (as a percentage of par value)	110.88		%
				Volatility	19.33		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 7.0% (6.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	144,042	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	23.59
				Convertible trading price (as a percentage of par value)	114.31		%
				Volatility	18.30		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	5.0% - 5.5% (5.25%)

39

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

12. SEGMENT INFORMATION

The Company's significant business segments for the three and six months ended June 30, 2016 and 2015 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, 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 and non-controlling interests for the three and six months ended June 30, 2016 and 2015 were as follows:

							Real		Corporate
	Tobacco			E-Cigarettes			Estate		and Other			Total
Three months ended June 30, 2016
Revenues	$	255,498		$	10		$	182,765	$	—		$	438,273
Operating income (loss)	66,016			(91		)	11,706		(6,911		)	70,720
Equity in earnings from real estate ventures	—			—			2,813		—			2,813
Depreciation and amortization	2,499			—			2,943		428			5,870
Three months ended June 30, 2015
Revenues	$	254,890		$	261		$	161,022	$	—		$	416,173
Operating income (loss)	56,215		(1)	(2,400		)	6,892		(4,904		)	55,803
Equity in earnings from real estate ventures	—			—			1,856		—			1,856
Depreciation and amortization	2,931			—			3,076		435			6,442
Six months ended June 30, 2016
Revenues	$	476,513		$	48		$	342,512	$	—		$	819,073
Operating income (loss)	127,499		(2)	(284		)	19,380		(13,716		)	132,879
Equity in earnings from real estate ventures	—			—			2,306		—			2,306
Depreciation and amortization	4,939			—			5,225		870			11,034
Capital expenditures	3,716			—			3,873		26			7,615
Six months ended June 30, 2015
Revenues	$	482,975		$	680		$	293,278	$	—		$	776,933
Operating income (loss)	105,885		(3)	(5,564		)	9,043		(9,843		)	99,521
Equity in earnings from real estate ventures	—			—			2,194		—			2,194
Depreciation and amortization	5,867			—			5,984		872			12,723
Capital expenditures	2,350			—			3,029		—			5,379

⁽¹⁾  Operating income includes $1,250 of litigation settlement expense and $1,607 of pension settlement expense.

⁽²⁾  Operating income includes $2,350 of litigation settlement expense, and $41 of restructuring expense.

⁽³⁾  Operating income includes $2,093 of litigation settlement expense and $1,607 of pension settlement 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 (“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 $835,000 principal amount of its 7.75% Senior Secured Notes due 2021 that are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of its cigarette businesses. (See Note 6). 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 June 30, 2016 and December 31, 2015, the related Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2016 and the related Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2016 and 2015 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.

41

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2016
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	335,034		$	32,246	$	107,458	$	—		$	474,738
Investment securities available for sale	120,283			40,571		—		—			160,854
Accounts receivable - trade, net	—			15,015		10,061		—			25,076
Intercompany receivables	16,435			—		—		(16,435		)	—
Inventories	—			92,735		—		—			92,735
Income taxes receivable, net	12,342			—		—		(12,124		)	218
Restricted assets	—			8,523		914		—			9,437
Other current assets	618			3,794		35,751		—			40,163
Total current assets	484,712			192,884		154,184		(28,559		)	803,221
Property, plant and equipment, net	1,452			51,122		19,330		—			71,904
Investments in real estate, net	—			—		23,328		—			23,328
Long-term investments	58,414			454		501		—			59,369
Investments in real estate ventures	—			—		206,139		—			206,139
Investments in consolidated subsidiaries	517,365			—		—		(517,365		)	—
Restricted assets	1,720			7,666		—		—			9,386
Goodwill and other intangible assets, net	—			107,511		155,355		—			262,866
Prepaid pension costs	—			21,302		—		—			21,302
Other assets	7,621			12,002		2,362		—			21,985
Total assets	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	16,523	$	92	$	—		$	16,615
Current portion of employee benefits	—			914		—		—			914
Intercompany payables	—			585		15,850		(16,435		)	—
Income taxes payable, net	—			11,501		623		(12,124		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			60,486		—		—			60,486
Other current liabilities	44,520			55,350		40,518		—			140,388
Total current liabilities	44,520			145,359		57,083		(28,559		)	218,403
Notes payable, long-term debt and other obligations, less current portion	1,104,171			6,338		222		—			1,110,731
Fair value of derivatives embedded within convertible debt	126,932			—		—		—			126,932
Non-current employee benefits	40,075			15,233		—		—			55,308
Deferred income taxes, net	7,826			35,138		44,950		—			87,914
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	5,285			45,010		5,353		—			55,648
Total liabilities	1,328,809			247,078		107,608		(28,559		)	1,654,936
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(257,525		)	145,863		371,502		(517,365		)	(257,525		)
Non-controlling interest	—			—		82,089		—			82,089
Total stockholders' (deficiency) equity	(257,525		)	145,863		453,591		(517,365		)	(175,436		)
Total liabilities and stockholders' deficiency	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500

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, 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
Investments in real estate, 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	7,582			11,769		1,769		—			21,120
Total assets	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615
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	848,368			7,519		221		—			856,108
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	1,074,662			244,029		100,750		(16,665		)	1,402,776
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	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615

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 June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,648		$	182,765		$	(140	)	$	438,273
Expenses:
Cost of sales	—			168,614			115,017			—			283,631
Operating, selling, administrative and general expenses	9,019			18,943			56,100			(140		)	83,922
Management fee expense	—			2,663			—			(2,663		)	—
Operating (loss) income	(9,019		)	65,428			11,648			2,663			70,720
Other income (expenses):
Interest expense	(35,522		)	(843		)	(4		)	—			(36,369		)
Change in fair value of derivatives embedded within convertible debt	7,416			—			—			—			7,416
Equity in earnings from real estate ventures	—			—			2,813			—			2,813
Equity in earnings (loss) from investments	1,097			(8		)	—			—			1,089
Gain on sale of investment securities available for sale	139			—			—			—			139
Impairment of investment securities available for sale	(49		)	—			—			—			(49		)
Equity in earnings in consolidated subsidiaries	46,441			—			—			(46,441		)	—
Management fee income	2,663			—			—			(2,663		)	—
Other, net	(93		)	244			430			—			581
Income before provision for income taxes	13,073			64,821			14,887			(46,441		)	46,340
Income tax benefit (expense)	10,942			(24,907		)	(5,038		)	—			(19,003		)
Net income	24,015			39,914			9,849			(46,441		)	27,337
Net income attributed to non-controlling interest	—			—			(3,322		)	—			(3,322		)
Net income attributed to Vector Group Ltd.	$	24,015		$	39,914		$	6,527		$	(46,441	)	$	24,015
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(3,322	)	$	—		$	(3,322	)
Comprehensive income attributed to Vector Group Ltd.	$	23,746		$	39,793		$	6,527		$	(46,320	)	$	23,746

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 June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,291		$	161,022		$	(140	)	$	416,173
Expenses:
Cost of sales	—			175,334			103,870			—			279,204
Operating, selling, administrative and general expenses	7,174			22,555			50,327			(140		)	79,916
Litigation settlement and judgment expense	—			1,250			—			—			1,250
Management fee expense	—			2,563			—			(2,563		)	—
Operating (loss) income	(7,174		)	53,589			6,825			2,563			55,803
Other income (expenses):
Interest expense	(30,880		)	(879		)	(2		)	—			(31,761		)
Change in fair value of derivatives embedded within convertible debt	5,256			—			—			—			5,256
Equity in earnings from real estate ventures	—			—			1,856			—			1,856
Equity in loss from investments	(2,147		)	(16		)	—			—			(2,163		)
Loss on sale of investment securities available for sale	(190		)	—			—			—			(190		)
Equity in earnings in consolidated subsidiaries	35,745			—			—			(35,745		)	—
Management fee income	2,563			—			—			(2,563		)	—
Other, net	1,192			200			429			—			1,821
Income before provision for income taxes	4,365			52,894			9,108			(35,745		)	30,622
Income tax benefit (expense)	13,242			(21,219		)	(3,201		)	—			(11,178		)
Net income	17,607			31,675			5,907			(35,745		)	19,444
Net income attributed to non-controlling interest	—			—			(1,837		)	—			(1,837		)
Net income attributed to Vector Group Ltd.	$	17,607		$	31,675		$	4,070		$	(35,745	)	$	17,607
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(1,837	)	$	—		$	(1,837	)
Comprehensive income attributed to Vector Group Ltd.	$	17,834		$	31,131		$	4,070		$	(35,201	)	$	17,834

45

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	476,790		$	342,512		$	(229	)	$	819,073
Expenses:
Cost of sales	—			305,358			214,695			—			520,053
Operating, selling, administrative and general expenses	18,215			37,216			108,548			(229		)	163,750
Litigation settlement and judgment expense	—			2,350			—			—			2,350
Management fee expense	—			5,325			—			(5,325		)	—
Restructuring charges	—			41			—			—			41
Operating (loss) income	(18,215		)	126,500			19,269			5,325			132,879
Other income (expenses):
Interest expense	(65,280		)	(1,802		)	(7		)	—			(67,089		)
Change in fair value of derivatives embedded within convertible debt	17,110			—			—			—			17,110
Equity in earnings from real estate ventures	—			—			2,306			—			2,306
Equity in losses from investments	(558		)	(24		)	—			—			(582		)
Gain on sale of investment securities available for sale	315			391			—			—			706
Impairment of investment securities available for sale	(90		)	(4,772		)	—			—			(4,862		)
Equity in earnings in consolidated subsidiaries	82,051			—			—			(82,051		)	—
Management fee income	5,325			—			—			(5,325		)	—
Other, net	307			481			840			—			1,628
Income before provision for income taxes	20,965			120,774			22,408			(82,051		)	82,096
Income tax benefit (expense)	22,388			(48,293		)	(7,461		)	—			(33,366		)
Net income	43,353			72,481			14,947			(82,051		)	48,730
Net income attributed to non-controlling interest	—			—			(5,377		)	—			(5,377		)
Net income attributed to Vector Group Ltd.	$	43,353		$	72,481		$	9,570		$	(82,051	)	$	43,353
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(5,377	)	$	—		$	(5,377	)
Comprehensive income attributed to Vector Group Ltd.	$	43,127		$	72,503		$	9,570		$	(82,073	)	$	43,127

46

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2015
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	483,914		$	293,278		$	(259	)	$	776,933
Expenses:
Cost of sales	—			332,994			188,228			—			521,222
Operating, selling, administrative and general expenses	14,368			43,892			96,096			(259		)	154,097
Litigation settlement and judgment expense	—			2,093			—			—			2,093
Management fee expense	—			5,125			—			(5,125		)	—
Operating (loss) income	(14,368		)	99,810			8,954			5,125			99,521
Other income (expenses):
Interest expense	(61,634		)	(1,870		)	(3		)	—			(63,507		)
Change in fair value of derivatives embedded within convertible debt	11,716			—			—			—			11,716
Equity in earnings from real estate ventures	—			—			2,194			—			2,194
(Loss) gain on sale of investment securities available for sale	(336		)	13,175			—			—			12,839
Equity in losses from investments	(1,543		)	(8		)	—			—			(1,551		)
Equity in earnings in consolidated subsidiaries	71,744			—			—			(71,744		)	—
Management fee income	5,125			—			—			(5,125		)	—
Other, net	2,257			520			981			—			3,758
Income before provision for income taxes	12,961			111,627			12,126			(71,744		)	64,970
Income tax benefit (expense)	25,867			(45,403		)	(4,509		)	—			(24,045		)
Net income	38,828			66,224			7,617			(71,744		)	40,925
Net income attributed to non-controlling interest	—			—			(2,097		)	—			(2,097		)
Net income attributed to Vector Group Ltd.	$	38,828		$	66,224		$	5,520		$	(71,744	)	$	38,828
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(2,097	)	$	—		$	(2,097	)
Comprehensive income attributed to Vector Group Ltd.	$	44,037		$	63,398		$	5,520		$	(68,918	)	$	44,037

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

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	73,915		$	75,513		$	28,437		$	(99,040	)	$	78,825
Cash flows from investing activities:
Sale of investment securities	62,312			4,721			—			—			67,033
Maturities of investment securities	343			—			—			—			343
Purchase of investment securities	(56,691		)	—			—			—			(56,691		)
Proceeds from sale or liquidation of long-term investments	1,000			—			—			—			1,000
Purchase of long-term investments	—			—			(50		)	—			(50		)
Investments in real estate ventures	—			—			(11,806		)	—			(11,806		)
Distributions from investments in real estate ventures	—			—			17,983			—			17,983
Increase in cash surrender value of life insurance policies	—			(393		)	—			—			(393		)
(Increase) decrease in restricted assets	(7		)	2,181			500			—			2,674
Investments in subsidiaries	(987		)	—			—			987			—
Proceeds from sale of fixed assets	—			4			1			—			5
Capital expenditures	(26		)	(3,716		)	(3,873		)	—			(7,615		)
Pay downs of investment securities	4,926			—			—			—			4,926
Investments in real estate, net	—			—			(81		)	—			(81		)
Net cash provided by investing activities	10,870			2,797			2,674			987			17,328
Cash flows from financing activities:
Proceeds from issuance of debt	243,225			—			57			—			243,282
Deferred financing costs	(6,600		)	—			—			—			(6,600		)
Repayments of debt	—			(2,863		)	(54		)	—			(2,917		)
Borrowings under revolver	—			89,695			—			—			89,695
Repayments on revolver	—			(80,223		)	—			—			(80,223		)
Capital contributions received	—			600			387			(987		)	—
Intercompany dividends paid	—			(65,648		)	(33,392		)	99,040			—
Dividends and distributions on common stock	(97,846		)	—			—			—			(97,846		)
Contributions from non-controlling interest	—			—			248			—			248
Distributions to non-controlling interest	—			—			(7,422		)	—			(7,422		)
Net cash provided by (used in) financing activities	138,779			(58,439		)	(40,176		)	98,053			138,217
Net increase (decrease) in cash and cash equivalents	223,564			19,871			(9,065		)	—			234,370
Cash and cash equivalents, beginning of period	111,470			12,375			116,523			—			240,368
Cash and cash equivalents, end of period	$	335,034		$	32,246		$	107,458		$	—		$	474,738

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

				Six Months Ended June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	42,679		$	99,159		$	13,057		$	(71,010	)	$	83,885
Cash flows from investing activities:
Sale of investment securities	103,846			14,415			—			—			118,261
Maturities of investment securities	1,737			—			—			—			1,737
Purchase of investment securities	(112,119		)	(1,476		)	—			—			(113,595		)
Proceeds from sale or liquidation of long-term investments	1,106			—			148			—			1,254
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(34,857		)	—			(34,857		)
Investments in real estate, net	—			—			(12,502		)	—			(12,502		)
Increase in cash surrender value of life insurance policies	(717		)	(401		)	—			—			(1,118		)
Increase in restricted assets	(1,327		)	(6,607		)	—			—			(7,934		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Pay downs of investment securities	3,530			—			—			—			3,530
Proceeds from sale of fixed assets	—			3			—			—			3
Investments in subsidiaries	(42,808		)	—			—			42,808			—
Proceeds from sale of preferred securities	—			—			1,000						1,000
Capital expenditures	—			(2,350		)	(3,029		)	—			(5,379		)
Net cash (used in) provided by investing activities	(51,752		)	3,584			(53,650		)	42,808			(59,010		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			22			—			—			22
Deferred financing costs	—			(625		)	—			—			(625		)
Repayments of debt	—			(3,254		)	(120		)	—			(3,374		)
Borrowings under revolver	—			126,727			—			—			126,727
Repayments on revolver	—			(144,492		)	—			—			(144,492		)
Capital contributions received	—			2,250			40,558			(42,808		)	—
Intercompany dividends paid	—			(69,075		)	(1,935		)	71,010			—
Dividends and distributions on common stock	(92,778		)	—			—			—			(92,778		)
Proceeds from exercise of Vector options	1,219			—			—			—			1,219
Tax benefit of options exercised	384			—			—			—			384
Net cash (used in) provided by financing activities	(91,175		)	(88,447		)	38,503			28,202			(112,917		)
Net (decrease) increase in cash and cash equivalents	(100,248		)	14,296			(2,090		)	—			(88,042		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	111,503		$	24,020		$	102,800		$	—		$	238,323

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, 2015 and Notes thereto, included in our 2015 Annual Report on Form 10-K, and our Consolidated Condensed Financial Statements and related Notes as of and for the quarterly period and six months ended June 30, 2016.

Overview

We are a holding company and are engaged principally in:

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

• the sale of electronic cigarettes in the United States through our Zoom E-Cigs LLC subsidiary, and

• the real estate business through our New Valley LLC subsidiary, which is seeking to acquire or invest in additional real estate properties or projects. New Valley owns 70.59% of Douglas Elliman, 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. We have seen significant changes in the e-cigarette market over the past year with 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 impact of recent regulation of e-cigarettes, including open-system vapor products. Given the current market situation, our primary focus on e-cigarettes is to pursue opportunities if they occur.

Recent Developments

Investments in Ladenburg Thalmann Financial Services (“LTS”) and Castle Brands Inc. (”Castle”). We adopted the equity method of accounting for our investments in LTS and Castle in 2015 because we determined that we had significant influence due to the evolution of the relationships with each company.  We have adjusted our condensed consolidated financial statements, retrospectively, as if the equity method had been in effect since inception.

Issuance of Senior Secured Notes due 2021. On May 9, 2016, we completed the sale of an additional $235,000 principal amount of our 7.75% Senior Secured Notes due 2021 for a price of 103.50% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933 (the "Securities Act"). We received net proceeds of approximately $236,900. The net proceeds will be used for general corporate purposes, including for additional investments in real estate and in our tobacco business. In August 2016, we completed an offer to exchange the 7.75% senior secured notes issued in May 2016 for an equal amount of newly issued 7.75% senior secured notes due 2021. The new 7.75% senior secured notes have substantially the same terms as the original notes, except that the new 7.75% senior secured notes have been registered under the Securities Act.

50

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, 2015. 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, 2015. 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 six months ended June 30, 2016 and 2015 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, Sagaponack and investments in real estate ventures.

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2016			2015				2016				2015
Revenues:
Tobacco	$	255,498		$	254,890			$	476,513			$	482,975
E-Cigarettes	10			261				48				680
Real Estate	182,765			161,022				342,512				293,278
Total revenues	$	438,273		$	416,173			$	819,073			$	776,933
Operating income (loss):
Tobacco	$	66,016		$	56,215		(1)	$	127,499		(2)	$	105,885		(3)
E-Cigarettes	(91		)	(2,400		)		(284		)		(5,564		)
Real Estate	11,706			6,892				19,380				9,043
Corporate and Other	(6,911		)	(4,904		)		(13,716		)		(9,843		)
Total operating income	$	70,720		$	55,803			$	132,879			$	99,521

____________________

⁽¹⁾   Operating income includes $1,250 of litigation settlement expense and $1,607 of pension settlement expense.

⁽²⁾   Operating income includes $2,350 of litigation settlement expense, and $41 of restructuring expense.

⁽³⁾ Operating income includes $2,093 of litigation settlement expense and $1,607 of pension settlement expense.

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

Revenues. Total revenues were $438,273 for the three months ended June 30, 2016 compared to $416,173 for the three months ended June 30, 2015. The $22,100 (5.3%) increase in revenues was due to an increase in Real Estate revenues of $21,743 primarily related to Douglas Elliman's brokerage revenues and a $608increase in Tobacco revenues offset by a $251decline in E-Cigarettes revenues.

51

Cost of sales. Total cost of sales were $283,631 for the three months ended June 30, 2016 compared to $279,204 for the three months ended June 30, 2015. The $4,427 (1.6%) increase in cost of sales was due to an increase in Real Estate cost of sales of $11,147 related to an increase of real estate commission expense at Douglas Elliman. This was offset by a $6,260decline in Tobacco cost of sales primarily related to a decreased sales volume and lower MSA expense as well as a $460decline in E-Cigarettes cost of sales. The calculation of our benefit from the MSA is an estimate based upon taxable unit shipments of cigarettes in the U.S. For the six months ended June 30, 2016, we estimated taxable shipments in the U.S. would decline by 3% in 2016. Our annual MSA expense changes by approximately $1,800 for each percentage change in the estimated shipment volumes in the U.S. market.

Expenses. Operating, selling, general and administrative expenses were $83,922 for the three months ended June 30, 2016 compared to $79,916 for the same period last year. This was an increase of $4,006 (5.0%) of which $5,817 was due to an increase in Real Estate operating, selling, general and administrative expenses primarily at Douglas Elliman and an increase in Corporate and Other expense of $2,007 primarily due to an increase in stock-based compensation expense, executive pension expense and increased professional fees. This was offset by a decline in E-Cigarettes operating, selling, general and administrative expenses of $2,101 and a decline in Tobacco operating, selling, general and administrative expenses of $1,682.

Operating income. Operating income was $70,720 for the three months ended June 30, 2016 compared to $55,803 for the same period last year, an increase of $14,917 (26.7%). Tobacco operating income increased by $9,801, Real Estate operating income increased by $4,814 primarily related to Douglas Elliman, and E-Cigarettes operating losses declined by $2,309. This was offset by an increase of $2,007 in Corporate and Other expenses.

Other income (expenses). Other expenses were$24,380 and $25,181 for the three months ended June 30, 2016 and 2015, respectively. For the three months ended June 30, 2016, other expenses primarily consisted of interest expense of $36,369 and impairment of investment securities available for sale of $49 . This was offset by income of $7,416 from changes in fair value of derivatives embedded within convertible debt, equity in earnings from real estate ventures of $2,813, equity in earnings on long-term investments of $1,089, gain on sale of investment securities available for sale of $139 and other income of $581. For the three months ended June 30, 2015, other expenses primarily consisted of interest expense of $31,761, a loss on sale of investment securities available for sale of $190 and equity in losses on long-term investments of $2,163. This was offset by income of $5,256 from changes in fair value of derivatives embedded within convertible debt, equity in earnings from real estate ventures of $1,856 and other income of $1,821.

Income before provision for income taxes. Income before income taxes was $46,340 and $30,622 for the three months ended June 30, 2016 and 2015, respectively.

Income tax expense. Income tax expense was $19,003 and $11,178 for the three months ended June 30, 2016 and 2015, respectively. Our provision for income taxes in interim periods is based on an estimated annual effective income tax rate derived, in part, from estimated annual income before provision for income taxes in accordance with guidance on accounting for income taxes on interim periods. For the three months ended June 30, 2016, our income tax expense was increased by $210 due primarily to a change in the estimated annual effective income tax rate.

Tobacco.

Tobacco revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in May 2015, November 2015, and May 2016. Liggett increased the list price of EAGLE 20's by $1.00 per carton in December 2015.

All of our Tobacco sales were in the discount category in 2016 and 2015. For the three months ended June 30, 2016, Tobacco revenues were $255,498 compared to $254,890 for the three months ended June 30, 2015. Revenues increased by $608 (0.2%) due to a favorable price variance of $8,195 offset by a 1.5%decline in sales volume of $7,587 (approximately 32.0 million units).

Tobacco cost of sales. The major components of our Tobacco cost of sales for the three months ended June 30, 2016 are as follows:

52

	Three Months Ended
	June 30,
	2016		2015
Manufacturing overhead, raw materials and labor	$	29,558	$	32,301
Federal Excise Taxes, net	106,861		108,912
Tobacco quota buyout expense	—		664		(1)
FDA expense	4,386		4,315
MSA expense, net of market share exemption	27,802		28,675
Total cost of sales	$	168,607	$	174,867

⁽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 three months ended June 30, 2015 represents a final assessment for the fourth quarter of 2014, which was received in the second quarter of 2015.

Tobacco gross profit was $86,891 for the three months ended June 30, 2016 compared to $80,023 for the three months ended June 30, 2015. The $6,868 (8.6%) increase was due to higher margins associated with the price increases primarily on the PYRAMID brand, lower manufacturing costs and lower MSA unit costs. As a percentage of revenues (excluding Federal Excise Taxes), Tobacco gross profit was 58.5% in the 2016 period and 54.8% in the 2015 period.

Tobacco expenses. Tobacco operating, selling, general and administrative expenses were $20,876 and $22,558 for the three months ended June 30, 2016 and 2015, respectively. The decline in expenses of $1,682 was due to decreased sales and marketing expenses primarily as a result of Liggett's restructuring in the third quarter of 2015 and a decline in pension expense, offset by an increase in professional fees. Tobacco expenses also declined for the three months ended June 30, 2016 due to the absence of a litigation, settlement and judgments expense of $1,250 for the same period in 2015.

Total tobacco product liability legal expenses, including settlements and judgments, were $1,707 and $3,158 for the three months ended June 30, 2016 and 2015, respectively.

Tobacco operating income. Tobacco operating income was $66,016 for the three months ended June 30, 2016 compared to $56,215 for the same period last year. The Tobacco operating income increase of $9,801 (17.4%) was primarily due to higher margins discussed above, lower operating expenses and decreased product liability settlement costs.

E-Cigarettes.

E-Cigarettes revenues were $10 for the three months ended June 30, 2016 compared to $261 for three months ended June 30, 2015. Revenues declined by $251 due to lower sales volumes.

Our E-Cigarettes cost of sales were $7 for the three months ended June 30, 2016 compared to $467 for the three months ended June 30, 2015. Cost of sales decreased by $460 due to lower sales volume.

E-Cigarettes operating, selling, general and administrative expenses were $93 and $2,194 for the three months ended June 30, 2016 and 2015, respectively. The decline was due to primarily lower sales and marketing expenses. Operating losses from E-Cigarettes were $91 and $2,400 for the three months ended June 30, 2016 and 2015, respectively.

Real Estate.

Real Estate Revenues. Real Estate revenues were $182,765 and $161,022 for the three months ended ended June 30, 2016 and 2015, respectively. Real Estate revenues increased by $21,743 (13.5%), primarily related to an increase of $22,348 in Douglas Elliman's Commission and other brokerage income which was primarily due to increased closings in its development marketing division.

Real Estate revenues and cost of sales for the three months ended June 30, 2016 and 2015 were as follows:

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	Three Months Ended
	June 30,
	2016		2015
Real Estate Revenues:
Commission and other brokerage income	$	173,368	$	151,020
Property management income	7,346		7,473
Title fees	1,016		1,123
Sales on facilities primarily from Escena	1,035		1,179
Other	—		227
Total real estate revenues	$	182,765	$	161,022
Real Estate Cost of Sales:
Commission and other brokerage income	$	113,953	$	102,767
Cost of sales on facilities primarily from Escena	893		934
Title fees	171		169
Total real estate cost of sales	$	115,017	$	103,870

^{___________________________________} 

Brokerage cost of sales. Douglas Elliman commission cost of sales increased by $11,186 due to increased sales volume.

Real Estate expenses. Real Estate operating, selling, general and administrative expenses were $56,077 and $50,260 for the three months ended June 30, 2016 and 2015, respectively. The increase of $5,817 was primarily due to increased expenses at Douglas Elliman from Douglas Elliman's continued expansion into new markets to strengthen the long-term value of the Douglas Elliman brand name as well as incremental professional fees in 2016 associated with the costs of being a subsidiary of a public company.

Real Estate operating income. The Real Estate segment had operating income of $11,706 and $6,892 for the three months ended June 30, 2016 and 2015, respectively. The increase in operating income of $4,814 was primarily related to higher profits offset by an increase in Douglas Elliman operating, selling, general and administrative expenses.

Corporate and Other.

Corporate and other operating loss. The operating loss at the corporate segment was $6,911 for the three months ended June 30, 2016 compared to $4,904 for the same period in 2015. The increase of $2,007 was primarily due to increased stock-based compensation expense, executive pension expense and increased professional fees for the three months ended June 30, 2016.

Six Months EndedJune 30, 2016 Compared to Six Months EndedJune 30, 2015

Revenues. Total revenues were $819,073 for the six months ended June 30, 2016 compared to $776,933 for the six months ended June 30, 2015. The $42,140 (5.4%) increase in revenues was due to an increase in Real Estate revenues of $49,234 primarily related to Douglas Elliman's brokerage revenues, offset by a $6,462decline in Tobacco revenues and a $632decline in E-Cigarettes revenues.

Cost of sales. Total cost of sales were $520,053 for the six months ended June 30, 2016 compared to $521,222 for the six months ended June 30, 2015. The $1,169 (0.2%) decline in cost of sales was due to an increase in Real Estate cost of sales of $26,467 related to an increase of real estate commission expense at Douglas Elliman. This was offset by a $26,552decline in Tobacco cost of sales primarily related to decreased sales volume and lower MSA expense as well as a $1,084decline in E-Cigarettes cost of sales. The Tobacco segment's MSA expense declined by $10,798 for the six months ended June 30, 2016 as a result of a $4,510 adjustment related to the receipt of the final calculation of our 2015 liability from the MSA's independent auditor as well as $6,288 due primarily to lower unit sales volumes for the six months ended June 30, 2016. The calculation of our benefit from the MSA is an estimate based upon taxable unit shipments of cigarettes in the U.S. For the six months ended June 30, 2016, we estimated taxable shipments in the U.S. would decline by 3% in 2016. Our annual MSA expense changes by approximately $1,800 for each percentage change in the estimated shipment volumes in the U.S. market.

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Expenses. Operating, selling, general and administrative expenses were $163,750 for the six months ended June 30, 2016 compared to $154,097 for the same period last year. This was an increase of $9,653 (6.3%) of which $12,465 was due to an increase in Real Estate operating, selling, general and administrative expenses primarily at Douglas Elliman and an increase in Corporate and Other expense of $3,873. This was offset by a decline in E-Cigarettes operating, selling, general and administrative expenses of $4,828 and a decline in Tobacco operating, selling, general and administrative expenses of $1,822.

Operating income. Operating income was $132,879 for the six months ended June 30, 2016 compared to $99,521 for the same period last year, an increase of $33,358 (33.5%). Tobacco operating income increased by $21,614, Real Estate operating income increased by $10,337 primarily related to Douglas Elliman, and E-Cigarettes operating losses declined by $5,280. This was offset by an increase of $3,873 in Corporate and Other expenses.

Other income (expenses). Other expenses were$50,783 and $34,551 for the six months ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016, other expenses primarily consisted of interest expense of $67,089, impairment of investment securities available for sale of $4,862 (primarily related to our investment in Morgans Hotel Group Co.) and equity in losses on long-term investments of $582. This was offset by income of $17,110 from changes in fair value of derivatives embedded within convertible debt, equity in earnings from real estate ventures of $2,306, other income of $1,628 and gain on sale of investment securities available for sale of $706. For the six months ended June 30, 2015, other expenses primarily consisted of interest expense of $63,507 and equity in losses on long-term investments of $1,551. This was offset by a gain on sale of investment securities available for sale of $12,839, income of $11,716 from changes in fair value of derivatives embedded within convertible debt, equity in earnings from real estate ventures of $2,194 and interest and other income of $3,758.

Income before provision for income taxes. Income before income taxes was $82,096 and $64,970 for the six months ended June 30, 2016 and 2015, respectively.

Income tax expense. Income tax expense was $33,366 and $24,045 for the six months ended June 30, 2016 and 2015, 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 six months ended June 30, 2016, our income tax expense was increased by $49 due primarily to the results of a recent state income tax audit.

Tobacco.

Tobacco revenues. Liggett increased the list price of PYRAMID, LIGGETT SELECT, EVE and GRAND PRIX by $0.70 per carton in May 2015, November 2015, and May 2016. Liggett increased the list price of EAGLE 20's by $1.00 per carton in December 2015.

All of our Tobacco sales were in the discount category in 2016 and 2015. For the six months ended June 30, 2016, Tobacco revenues were $476,513 compared to $482,975 for the six months ended June 30, 2015. Revenues declined by $6,462 (1.3%) due to a 4.2%decline in sales volume of $23,516 (approximately 170.1 million units), offset by a favorable price variance of $17,054.

Tobacco cost of sales. The major components of our Tobacco cost of sales for the six months ended June 30, 2016 are as follows:

		Six Months Ended
		June 30,
		2016		2015
Manufacturing overhead, raw materials and labor		$	55,369	$	61,963
Federal Excise Taxes, net		197,707		206,271
Tobacco quota buyout expense		—		664		(1)
FDA expense		9,632		9,564
MSA expense, net of market share exemption		42,637		53,435
	Total cost of sales	$	305,345	$	331,897

⁽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 six months ended June 30, 2015 represents a final assessment for the fourth quarter of 2014, which was received in 2015.

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Tobacco gross profit was $171,168 for the six months ended June 30, 2016 compared to $151,078 for the six months ended June 30, 2015. The $20,090 (13.3%) increase was due to higher margins associated with the price increases primarily on the PYRAMID brand, lower manufacturing costs and lower estimated MSA unit costs. As a percentage of revenues (excluding Federal Excise Taxes), Tobacco gross profit was 61.4% in the 2016 period and 54.6% in the 2015 period.

Tobacco expenses. Tobacco operating, selling, general and administrative expenses were $41,279 for the six months ended June 30, 2016 compared to $43,101 for the six months ended June 30, 2015. The $1,822decline in expenses was due to a decline in sales and marketing expenses primarily as a result of Liggett's restructuring in the third quarter of 2015 and a decrease in pension expense, offset by an increase in professional fees. In addition, Tobacco expenses increased for the six months ended June 30, 2016 and 2015 due to litigation, settlement and judgments expense of $2,350 and $2,093, respectively. Tobacco expenses also increased for the six months ended June 30, 2016 due to restructuring expenses of $41.

Tobacco product liability legal expenses, including settlements and judgments, were $5,878 and $5,713 for the six months ended June 30, 2016 and 2015, respectively.

Tobacco operating income. Tobacco operating income was $127,499 for the six months ended June 30, 2016 compared to $105,885 for the same period last year. The Tobacco operating income increase of $21,614 (20.4%) was primarily due to higher margins and lower operating expenses discussed above, partially offset by increased product liability settlement costs.

E-Cigarettes.

E-Cigarettes revenues were $48 for the six months ended June 30, 2016 compared to $680 for the six months ended June 30, 2015. Revenues declined by $632 due to lower sales volumes.

Our E-Cigarettes cost of sales were $13 for the six months ended June 30, 2016 compared to $1,097 for the six months ended June 30, 2015. Cost of sales decreased by $1,084 due to lower sales volumes.

E-Cigarettes operating, selling, general and administrative expenses were $318 and $5,146 for the six months ended June 30, 2016 and 2015, respectively. The decline was due to lower sales and marketing expenses. Operating losses from E-Cigarettes were $284 and $5,564 for the six months ended June 30, 2016 and 2015, respectively.

Real Estate.

Real Estate revenues. Real Estate revenues were $342,512 and $293,278 for the six months ended ended June 30, 2016 and 2015, respectively. Real Estate revenues increased by $49,234 (16.8%), primarily related to an increase of $49,996 in Douglas Elliman's Commission and other brokerage income which was primarily due to increased closings in its development marketing division.

.

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Real Estate revenues and cost of sales for the six months ended ended June 30, 2016 were as follows:

	Six Months Ended
	June 30,
	2016		2015
Real Estate Revenues:
Commission and other brokerage income	$	322,722	$	272,726
Property management income	14,464		14,686
Title fees	2,128		1,951
Sales on facilities primarily from Escena	3,195		3,524
Other	3		391
Total real estate revenues	$	342,512	$	293,278
Real Estate Cost of Sales:
Commission and other brokerage income	$	212,365	$	185,864
Cost of sales on facilities primarily from Escena	2,010		2,055
Title fees	320		309
Total real estate cost of sales	$	214,695	$	188,228

Brokerage cost of sales. Douglas Elliman commission cost of sales increased by $26,501 due to increased sales volume.

Real Estate expenses. Real Estate operating, selling, general and administrative expenses were $108,472 and $96,007 for the six months ended June 30, 2016 and 2015, respectively. The increase of $12,465 was primarily due to increased expenses at Douglas Elliman from Douglas Elliman's continued expansion into new markets to strengthen the long-term value of the Douglas Elliman brand name as well as incremental professional fees in 2016 associated with the costs of being a subsidiary of a public company.

Real Estate operating income. The Real Estate segment had operating income of $19,380 and $9,043 for the six months ended June 30, 2016 and 2015, respectively. The increase in operating income of $10,337 was primarily related to higher profits offset by an increase in Douglas Elliman operating, selling, general and administrative expenses.

Corporate and other.

Corporate and other loss. The operating loss at the corporate segment was $13,716 for the six months ended June 30, 2016 compared to $9,843 for the same period in 2015. The increase of $3,873 was primarily due to increased stock-based compensation expense, executive pension expense and increased professional fees for the six months ended June 30, 2016.

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Summary of Real Estate Investments

We own, and seek to acquire investment interests in various domestic and international real estate projects through debt and equity investments. Our real estate investments primarily include the following projects as of June 30, 2016:

	(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 June 30, 2016		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	%	$	12,684	$	—		$	12,684	$	—	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	%	2,644		8,000			10,644		—		450	Acres			667 450	R Lots H	N/A	N/A
Investments in real estate, net					$	15,328	$	8,000		$	23,328	$	—
10 Madison Square West (1107 Broadway)	Flatiron District/NoMad neighborhood, Manhattan, NY	October 2011	5.0	%	$	1,351	$	7,837		$	9,188	$	—	260,000	SF	20,000	SF	124	R	August 2012	December 2016
The Marquand (11 East 68th Street)	Upper East Side, Manhattan, NY	December 2011	18.0	%	3,396		5,937			9,333		—		90,000	SF	—		29	R	June 2012	Completed
11 Beach Street	TriBeCa, Manhattan, NY	June 2012	49.5	%	12,328		1,374			13,702		—		97,000	SF	—		27	R	May 2014	December 2016
20 Times Square (701 Seventh Avenue)	Times Square, Manhattan, NY	August 2012	7.1	%	14,280		2,207			16,487		—		252,000	SF	80,000	SF	452	H	September 2013	January 2018
111 Murray Street	TriBeCa, Manhattan, NY	May 2013	9.5	%	25,719		(411		)	25,308		—		330,000	SF	1,700	SF	157	R	September 2014	September 2018
160 Leroy Street (2)	West Greenwich Village, Manhattan, NY	March 2013	3.1	%	2,664		1,847			4,511		—		130,000	SF	—		57	R	Fall 2015	March 2018
215 Chrystie Street	Lower East Side, Manhattan, NY	December 2012	18.4	%	5,297		432			5,729		—		246,000	SF	—		11 367	R H	June 2014	March 2017
The Dutch (25-19 43rd Avenue)	Long Island City, NY	May 2014	9.9	%	980		149			1,129				65,000	SF	—		86	R	September 2014	January 2017
Queens Plaza (23-10 Queens Plaza South)	Long Island City, NY	December 2012	45.4	%	14,711		2,123			16,834		—		260,000	SF	25,000	SF	391	R	March 2014	October 2016
87 Park (8701 Collins Avenue)	Miami Beach, FL	December 2013	15.0	%	8,275		571			8,846		—		160,000	SF	TBD		70	R	October 2015	September 2018
125 Greenwich Street (2)	Financial District, Manhattan, NY	August 2014	13.3	%	7,992		1,788			9,780		—		306,000	SF	16,000	SF	273	R	March 2015	March 2019
West Hollywood Edition (9040 Sunset Boulevard)	West Hollywood, CA	October 2014	48.5	%	6,028		1,022			7,050		—		210,000	SF	—		20 190	R H	May 2015	April 2018
76 Eleventh Avenue	West Chelsea, Manhattan, NY	May 2015	5.1	%	17,000		1,867			18,867		—		620,000	SF	48,000	SF	250	H	September 2016	March 2019
Monad Terrace	Miami Beach, FL	May 2015	31.3	%	7,635		139			7,774		—		160,000	SF	—		TBD	R	May 2016	May 2018
Takanasee	Long Branch, NJ	December 2015	22.8	%	4,428		488			4,916		—		TBD		N/A		TBD	R	TBD	TBD
Condominium and Mixed Use Development					$	132,084	$	27,370		$	159,454	$	—
Maryland Portfolio	Primarily Baltimore County, MD	July 2012	7.6	%	$	1,395	$	(1,395	)	$	—	$	—	N/A		N/A		5,517	R	N/A	N/A
ST Portfolio	Houston, TX and Stamford, CT	November 2013	16.3	%	5,976		3,217			9,193		—		640,576	SF	20,065	SF	488	R	N/A	N/A
Apartment Buildings					$	7,371	$	1,822		$	9,193	$	—
Park Lane Hotel	Central Park South, Manhattan, NY	November 2013	5.2	%	$	26,211	$	(5,073	)	$	21,138	$	—	445,600	SF	—		628	H	N/A	N/A
Hotel Taiwana	St. Barthelemy, French West Indies	October 2011	17.0	%	7,941		(155		)	7,786		—		61,300	SF	4,300	SF	22	H	N/A	N/A
Coral Beach and Tennis Club	Coral Beach, Bermuda	December 2013	49.0	%	6,048		(2,886		)	3,162		—		52	Acres	—		101	H	N/A	N/A
Hotels					$	40,200	$	(8,114	)	$	32,086	$	—
The Plaza at Harmon Meadow	Secaucus, NJ	March 2015	49.0	%	$	5,217	$	(1,535	)	$	3,682	$	—	—	—	217,613	SF	—	—	N/A	N /A
Commercial					$	5,217	$	(1,535	)	$	3,682	$	—
Total Carrying Value					$	200,200	$	27,543		$	227,743
(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) Carrying value as of June 30, 2016, includes non-controlling interest of $2,172 and $1,853, 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 an insurance company by Douglas Elliman with a carrying value of $1,724 as of June 30, 2016. New Valley has capitalized $14,764 of net interest expense since inception into the carrying value of its ventures whose projects were under development as of June 30, 2016. This amount is captured in the "Cumulative Earnings (Losses)" column in the table above.

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Liquidity and Capital Resources

Cash and cash equivalents increased by $234,370 for the six months endedJune 30, 2016 and decreased by $88,042 for the six months endedJune 30, 2015.

Cash provided from operations was $78,825 and $83,885 for the six months endedJune 30, 2016 and 2015, respectively. The change primarily related to higher payments of tobacco litigation settlements and judgments, other current liabilities and income taxes in the 2016 period, offset by an increase of operating income.

Cash provided by investing activities was $17,328 for the six months endedJune 30, 2016 compared to cash used in investing activities of $59,010 for the six months endedJune 30, 2015. In the first six months of 2016, cash provided by investing activities was from the sale of investment securities of $67,033, pay downs of investment securities of $4,926, the proceeds from sale or liquidation of long-term investments of $1,000, the maturity of investment securities of $343, distributions from investments in real estate ventures of $17,983, a decrease in restricted assets of $2,674 and proceeds from the sale of fixed assets of $5. This was offset by the purchase of investment securities of $56,691, investments in real estate ventures of $11,806, capital expenditures of $7,615, investments in real estate, net of $81, an increase in cash surrender value of corporate-owned life insurance policies of $393 and purchase of long-term investments of $50. In the first six months of 2015, cash used in investing activities was for the purchase of investment securities of $113,595, investments in real estate ventures of $34,857, investments in real estate, net of $12,502, purchase of long-term investments of $5,000, capital expenditures of $5,379, an increase in restricted assets of $7,934, issuance of notes receivable of $4,410 and an increase in cash surrender value of corporate-owned life insurance policies of $1,118. This was offset by the sale of investment securities of $118,261, maturities of investment securities of $1,737, proceeds from the liquidation of long-term investments of $1,254, pay downs of investment securities of $3,530, proceeds from sale of preferred securities of $1,000 and proceeds from the sale of fixed assets of $3.

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.

Cash provided by financing activities was $138,217 for the six months endedJune 30, 2016 compared to cash used in financing activities of $112,917 for the six months endedJune 30, 2015. In the first six months of 2016, cash provided by financing activities was from proceeds of debt issuance of $243,282, proceeds from net borrowings of debt under the revolver of $9,472 and contributions from non-controlling interest of $248. This was offset by cash used for the dividends on common stock of $97,846, repayments of debt of $2,917, distributions to non-controlling interest of $7,422 and payment of deferred financing costs of $6,600. In the first six months of 2015, cash was used for dividends on common stock of $92,778, payment of deferred financing costs of $625, repayment of debt of $3,374 and net repayments of debt under the revolver of $17,765. This was offset by proceeds from the exercise of Vector options of $1,219, the tax benefit of options exercised of $384 and proceeds from issuance of debt of $22.

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 and on May 9, 2016 we issued $235,000 of our 7.75% Senior Secured Notes for a price of 103.5%. 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 6.0% on a “yield to worst” basis, or approximately 5.1% more than the comparable U.S. Treasury Bond at June 30, 2016. 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. There can be no assurance that we would be able to continue to issue debt at a lower interest rate than our historical borrowing levels in the future and, 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 of June 30, 2016, $15,955 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the Credit Facility was approximately $44,045 based on eligible collateral at June 30, 2016. At June 30, 2016, management believed that Liggett was in compliance with all covenants under the credit facility; Liggett's EBITDA, as defined, were approximately $228,072 for the last twelve months ended June 30, 2016.

Vector. 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

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for indebtedness. The following table summarizes the requirements of financial covenants and the results of the calculation, as defined by the indenture.

	Indenture	June 30, 2016	December 31, 2015
Covenant	Requirement
Consolidated EBITDA, as defined	$75,000	$314,861	$268,870
Leverage ratio, as defined	<3.0 to 1	1.71 to 1	1.95 to 1
Secured leverage ratio, as defined	<1.5 to 1	0.8 to 1	0.9 to 1

We and our subsidiaries have significant indebtedness and debt service obligations. At June 30, 2016, we and our subsidiaries had total outstanding indebtedness of $1,346,925, of which $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 $835,000 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 $474,700, investment securities available for sale of approximately $160,900, long-term investments with an estimated value of approximately $62,400 and availability under Liggett's credit facility of approximately $44,000 at June 30, 2016. 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 June 30, 2016, approximately $16,000 of our outstanding debt at face value had variable interest rates determined by various interest rate indices, which increases the risk of fluctuating interest rates. Our exposure to market risk includes interest rate fluctuations in connection with our variable rate borrowings, which could adversely affect our cash flows. As of June 30, 2016, 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 $160.

In addition, as of June 30, 2016, $287,952 ($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, and debt issuance costs. 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 $1,917 with approximately $752 resulting from the embedded derivative associated with the 7.5% variable interest senior convertible notes, and the remaining $1,165 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 $10,300 per year.

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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 $127,870 and $125,983. We recorded the fair market value of our embedded derivatives at the approximate midpoint of the range at $126,932 as of June 30, 2016. 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 other than those set forth below 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, 2015. Please refer to that section and the information below for disclosures regarding the critical accounting policies related to our business.

On May 5, 2016, the United States Food and Drug Administration ("FDA") issued a final "deeming" regulation that extends the agency’s authority under the Tobacco Control Act to other tobacco products not currently regulated by the agency, such as e-cigarettes, cigars, pipe tobacco and hookah. With respect to these newly-regulated tobacco products, the deeming regulation, among other things:

•establishes a minimum age of 18 years to purchase the products;

•establishes identification restrictions to prevent underage sales of the products;

•requires specific health warnings on product packages and advertisements;

•requires registration with FDA and reporting of product and ingredient listings;

•prohibits distribution of free samples of the products;

• prohibits the sale of modified risk tobacco products (including those described as “light,” “low,” or “mild”) unless authorized by FDA;

•prohibits vending machine sales (unless in an adult-only facility); and

• requires FDA review to market new tobacco products introduced after the proposed grandfathered date of February 15, 2007.

Under the new "deeming" rule, manufacturers of the newly-regulated products, including e-cigarettes, will be subject to the same Tobacco Control Act provisions and relevant regulatory requirements that already apply to cigarettes. As of August 8, 2016, domestic manufacturers must register and list the tobacco products with FDA and obtain premarket market authorization for any product introduced after this date. For products introduced between February 15, 2007 and August 8, 2016, the premarket authorization requirements are subject to certain staggered compliance periods. Requests for exemption from the substantial equivalence requirement must be submitted by August 8, 2017. Substantial equivalence reports must be submitted by February 8, 2018. Premarket tobacco product applications must be submitted by August 8, 2018. Unless FDA issues an order denying or refusing to accept an application, FDA will not take enforcement action against the product for one year after the application deadline. However, at the end of that period, even if FDA has not completed its review, the product will be subject to enforcement action unless FDA determines that “substantial progress” is being made towards completion and decides to defer enforcement for a reasonable time period. FDA has not set deadlines for its own review.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

• economic outlook,

• capital expenditures,

• cost reduction,

• legislation and regulations,

• cash flows,

• operating performance,

• litigation,

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

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

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

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

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

• governmental regulations and policies,

• effects of industry competition,

• 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 and other tobacco-related litigations including the Engle progeny cases pending in Florida and other individual and class action cases where certain plaintiffs have alleged compensatory and punitive damage amounts ranging into the hundreds of million and even billions of dollars; 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, 2015 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.

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ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed or submitted 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 such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), 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 CEO and CFO, as of June 30, 2016, 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 CEO and CFO concluded that, as of June 30, 2016, 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 2015 Form 10-K. Management has concluded that the material weaknesses that were present at December 31, 2015 continued to exist as of June 30, 2016, 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.

These material weaknesses did not result in any material misstatements to the financial statements in any accounting periods ending prior to January 1, 2016 or for the six months ended June 30, 2016. However, these material 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.

Status of Remediation

The Company identified five material weaknesses related to its Douglas Elliman subsidiary as of December 31, 2014 and two material weaknesses related to its Douglas Elliman subsidiary as of December 31, 2015. Beginning in 2015, at the direction of the Audit Committee of the Company's Board of Directors, as well as the Company’s CEO and CFO, the Company has made and continues to make substantial progress in remediating these material weakness including:

• In June 2015, Douglas Elliman employed a new Chief Financial Officer, who is a licensed Certified Public Accountant (“CPA”) with more than 30 years of experience in the financial departments of publicly-traded companies. In addition, in 2015, Douglas Elliman also added a Director of Sarbanes-Oxley Section 404 Compliance, a corporate controller, who is licensed as a CPA and previously served as a senior manager at a Big Four accounting firm, two regional controllers, who are both currently licensed as CPAs and previously served as managers at Big Four accounting firms, and two accounting managers who are both licensed as CPAs.

• In August 2015, Douglas Elliman employed a new Chief Technology Officer (“CTO”) who was previously a technology executive with a large U.S. financial institution. Douglas Elliman’s new CTO oversees, among other things, security of the accuracy and completeness of the Company’s financial reporting.

• During 2015, Douglas Elliman improved its documentation of internal controls into a more robust format that has been designed to detect errors that could lead to material misstatements in the Company’s consolidated financial statements.

• During 2015, the Company redesigned and implemented a series of newly-created internal controls related to previously improper internal controls related to segregation of duties by accounting and finance personnel at Douglas Elliman.

The result of these efforts led to the remediation of the following material weaknesses as of December 31, 2015:

(i) Douglas Elliman’s previous failure to monitor controls in certain areas relating to the period-end financial reporting process,

(ii) Douglas Elliman’s previous failure to maintain effective controls over 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; and,

(iii) Douglas Elliman’s previous ineffective controls over the processing and recording of recurring and non-recurring journal entries.

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Further, with the enhancements and focus described above, the Company is vigorously continuing its remediation efforts in 2016 related to the following material weaknesses:

(i) Certain controls at Douglas Elliman related to segregation of duties with accounting and finance personnel were designed, but not operating, properly at December 31, 2015; and,

(ii) Douglas Elliman did not maintain effective controls over access to its information technology system for finance and accounting (“IT System”). Specifically, root level access to Douglas Elliman’s IT System was shared with the third party software provider that allowed unrestricted and unmonitored access to the application and it database. Further, the Company did not have an effective change management process to reasonably assure that changes to the IT System were properly documented, tracked, reviewed, tested and approved.

The Company’s management, Audit Committee and Board of Directors are committed to maintaining a strong and sustainable internal control environment and believe that these remediation efforts represent significant improvements in the Company’s control environment as well as its internal controls over the financial reporting of Douglas Elliman. Nonetheless, the Company continues to address the two remaining material weaknesses and evaluate the effectiveness of its new internal controls to confirm that a sustainable, controlled process is fully in place. In 2016, the Company will continue to introduce processes to help ensure that Douglas Elliman’s financial reporting is complete and accurate. Further, the identified material weaknesses in internal controls 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

The Company’s Board of Directors and its management, including the CEO and CFO, evaluated the changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2016 and concluded there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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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

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, 2015.

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

No equity securities of ours which were not registered under a private offering of the Securities Act of 1933 have been issued or sold by us during the three months ended June 30, 2016.

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Item 6.    Exhibits:

4.1	Fourth Supplemental Indenture, dated as of May 9, 2016, among Vector Group Ltd., the guarantors named therein and U.S. Bank National Association, as trustee. (incorporated by reference to Exhibit 4.5 of Vector Group Ltd.’s Current Report on Form 8-K dated May 9, 2016).
4.2	Registration Rights Agreement, dated as of May 9, 2016, among Vector Group Ltd., the guarantors named therein and Jefferies LLC, as the initial purchaser. (incorporated by reference to Exhibit 4.6 of Vector Group Ltd.’s Current Report on Form 8-K dated May 9, 2016).
12.1	Computation of Ratio of Earnings to Fixed Charges for each of the five years within the period ended December 31, 2015 and for each of the six months within the periods ended June 30, 2016 and 2015.
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

66

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
		Senior Vice President, Treasurer and
		Chief Financial Officer
Date:	August 5, 2016

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EX-12.1

Exhibit 12.1

VECTOR GROUP LTD.

Computation of Ratio of Earnings to Fixed Charges

(Dollars in Thousands, Except Ratios)

(Unaudited)

	Six Months Ended June 30,				Year Ended December 31,
	2016		2015		2015	2014		2013		2012		2011
Earnings as defined:
Pre-tax income	82,096		64,970		107,705	82,279		60,720		53,806		122,245
Distributions from investees	12,565		2,263		7,152	6,568		6,262		21,467		10,022
Interest expense	49,979		51,791		96,236	146,787		147,084		132,538		93,939
Income in equity of affiliate	(1,724	)	(643	)	680	(7,243	)	(26,051	)	(30,028	)	(19,256	)
Interest portion of rental expense (1)	4,209		3,854		8,149	7,505		2,174		1,367		1,438
Total earnings	147,125		122,235		219,922	235,896		190,189		179,150		208,388
Fixed charges as defined:
Interest expense	49,979		51,791		96,236	146,787		147,084		132,538		93,939
Interest portion of rent expense (1)	4,209		3,854		8,149	7,505		2,174		1,367		1,438
Total fixed charges	54,188		55,645		104,385	154,292		149,258		133,905		95,377
Ratio of earnings to fixed charges	2.72		2.2		2.11	1.53		1.27		1.34		2.18

________________________

(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: August 5, 2016

/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: August 5, 2016

/s/ J. Bryant Kirkland III

J. Bryant Kirkland III

Senior Vice President, Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2016 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.

August 5, 2016

/s/ Howard M. Lorber

Howard M. Lorber

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2016 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.

August 5, 2016

/s/ J. Bryant Kirkland III

J. Bryant Kirkland III

Senior 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 245Engle 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 June 30, 2017 (listed alphabetically).

Braff v. R.J. Reynolds,et al., Case No. 08-25826, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for the trial period of 10/05/16 - 12/31/16.

Cohen v. R.J. Reynolds,et al., Case No. 14-018677(23), Circuit Court of the 11^th Judicial Circuit, Miami-Dade County (case filed 07/17/14). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 04/04/17.

Cossick v. R.J. Reynolds,et al., Case No. 07-036740-19, Circuit Court of the 17^th Judicial Circuit, Broward 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 the trial period of 01/04/17 - 03/31/17.

Duncan v. R.J. Reynolds, et al., Case No. 2009-30218, Circuit Court of the 7^th Judicial Circuit, Volusia County (case filed 01/15/09).  One individual suing. The case is scheduled for trial starting 01/17/17.

Fox v. R.J. Reynolds,et al., Case No. 08-26348, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/09/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for the trial period of 10/05/16 - 12/31/16.

Gates,et al., v. R.J. Reynolds,et al., Case No. 07- 025811-19, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08). Two individuals suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for the trial period of 01/04/17 - 03/31/17.

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 02/17/17.

Liles v. R.J. Reynolds, et al., Case No. 2009-30060, Circuit Court of the 7^th Judicial Circuit, Volusia County (case filed 01/15/09).  Two individuals suing. The case is scheduled for trial starting 01/17/17.

Lima v. R.J. Reynolds Tobacco Co., et al., Case No. 15-CA-007140, Hillsborough County (case filed 08/03/15).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 04/03/17.

Martin v. R.J. Reynolds,et al., Case No. 07-036440 (19), Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 12/27/07).   One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for the trial period of 10/05/16 - 12/31/16.

1

Nixon v. R.J. Reynolds,et al., Case No. 07-CA-024426, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/08/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for trial starting 02/17/17.

Oshinsky-Blacker v. R.J. Reynolds,et al., Case No. 08-25841, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 08/31/16.

Rogers v. R.J. Reynolds,et al., Case No. 08-000533-19, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 01/04/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for the trial period of 01/04/17 - 03/31/17.

Santoro v. R.J. Reynolds,et al., Case No. 08-025807, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08). One individual suing on behalf of the estate and survivors of a deceased smoker. The case is scheduled for the trial period of 01/04/17 - 03/31/17.

Walker v. R.J. Reynolds, et al., Case No. 50-2008-CA-000238, Circuit Court of the 15^th Judicial Circuit, Palm Beach County (case filed 01/04/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for trial starting 05/01/17. 

Weinstein v. R.J. Reynolds, et al., Case No. 08-CA-025840, Circuit Court of the 17^th Judicial Circuit, Broward County (case filed 06/05/08).  One individual suing on behalf of the estate and survivors of a deceased smoker.  The case is scheduled for the trial period of 01/04/17 - 03/31/17.  

(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 appealed 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 complete.

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, which the court subsequently reduced to $16,100,000.  The jury apportioned fault as follows: Decedent - 20.5%, R.J. Reynolds - 27%, Philip Morris - 25%, Lorillard - 18% and Liggett - 9.5% ($1,529,500).  In August 2012, the trial court entered a joint and several judgment for compensatory damages in that amount. 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 January 2016, the Fourth District Court of Appeal reversed in part and remanded the case for a new trial on plaintiff’s fraudulent concealment and conspiracy claims because of the trial court’s failure to instruct the jury that plaintiff must establish detrimental reliance to prevail on those claims.  The court further remanded for a new trial on the entitlement to, and amount of, punitive damages in light of its ruling on the fraudulent concealment and conspiracy claims.  In addition, the court instructed the trial court that it should apportion the compensatory damages based on the jury’s assignment of fault to the respective parties.  The court also granted the plaintiff's motion for appellate attorneys' fees and costs. Plaintiff and defendants moved for rehearing of that decision.

2

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 on the negligence and strict liability claims 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 July 2013, the trial court granted defendants' motion for a new trial due to plaintiff's improper arguments during closing. Plaintiff appealed and the defendants cross appealed to the Fourth District Court of Appeal. Oral argument occurred on June 7, 2016. A decision is pending.

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 appealed to the Fourth District Court of Appeal and the defendants cross appealed. Briefing is underway.

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. In December 2010, the trial court entered an amended final judgment to provide that interest would run from April 26, 2010. In June 2013, 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 denying the defendant's motion for remittitur of the compensatory damages. As a result, the Fourth District Court of Appeal reversed and remanded for further proceedings. In February 2016, the Florida Supreme Court reinstated the jury's verdict. The Florida Supreme Court, on motion by defendants, clarified that its decision only reversed that part of the Fourth District Court of Appeal’s decision relating to the statute of repose.  Accordingly, the Fourth District Court of Appeal’s  decision holding that the compensatory damages award was excessive remains intact.  On remand to the Fourth District Court of Appeal, plaintiff requested supplemental briefing seeking a new trial on punitive damages as to Liggett. Liggett opposed the requested relief. A decision is pending. On remand, the trial court will enter a remittitur which either party may reject.  If the remittitur is rejected, there will be a new trial on compensatory damages. Further, if plaintiff's motion is granted, there will be a Liggett only trial on punitive damages. 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.

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.  In November 2015, the trial court awarded plaintiff $981,116 in attorneys’ fees and costs and entered final judgment jointly and severally against defendants.  Defendants appealed that final judgment and briefing is underway. Other than the issue regarding attorneys' fees, this matter is concluded.

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B. Other Individual Cases.

Florida

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 filed a 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 Group.  The amended complaint asserts both Engle and non-Engle claims.  In September 2015, Liggett and Vector Group answered the amended complaint and asserted various defenses, including that all of plaintiff’s claims are time barred. The case is scheduled for trial starting 06/05/17.

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. The case is scheduled for trial starting 04/07/17.

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.

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.

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.

Louisiana

Baker,et al. v. R.J. Reynolds,et al., Case No. 2:15-CV-05749, District Court, Eastern District of Louisiana, (case filed 11/05/15). One individual suing on behalf of the estate and survivor of a deceased smoker. As of June 30, 2016, Liggett had not been served with the complaint.

4

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.

Majors v. Union Carbide Corporation,et al., Case No. 24-X-14-000397, Circuit Court, Baltimore City (case filed 06/09/15). 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.

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.

5

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 case management conference occurred on June 24, 2016.

New York

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. In November 2015, the court entered a case management order providing discovery deadlines. A status conference is scheduled for August 2, 2016.

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. The case is stayed.

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.

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

6

claim was affirmed by the intermediate appellate court in May 2010.  Plaintiffs' motion to reargue the decision was denied by the appellate court. The case is stayed.

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 date for the consolidated trials for January 9, 2017. 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.  On May 23, 2016, the trial court ruled that the case could proceed against Liggett. Liggett intends to seek appellate review of that decision.  It is estimated that Liggett could be a defendant in approximately 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 exposure. The plaintiffs seek an unspecified amount of compensatory and punitive damages. No class certification hearing has been held. In 2013, plaintiffs' motion to stay the case was granted.  

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III.HEALTH CARE COST RECOVERY ACTIONS

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

8

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 05, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	VECTOR GROUP LTD
Entity Central Index Key	0000059440
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		123,754,768

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 474,738	$ 240,368
Investment securities available for sale	160,854	181,976
Accounts receivable - trade, net	25,076	23,889
Inventories	92,735	86,516
Income taxes receivable, net	218	2,841
Restricted assets	9,437	9,195
Other current assets	40,163	38,954
Total current assets	803,221	583,739
Property, plant and equipment, net	71,904	75,632
Investments in real estate, net	23,328	23,318
Long-term investments	59,369	62,726
Investments in real estate ventures	206,139	217,168
Restricted assets	9,386	12,303
Goodwill and other intangible assets, net	262,866	263,959
Prepaid pension costs	21,302	20,650
Other assets	21,985	21,120
Total assets	1,479,500	1,280,615
Current liabilities:
Current portion of notes payable and long-term debt	16,615	8,919
Current payments due under the Master Settlement Agreement	56,972	29,241
Current portion of employee benefits	914	915
Income taxes payable, net	0	96
Litigation accruals	3,514	22,904
Other current liabilities	140,388	154,217
Total current liabilities	218,403	216,292
Notes payable, long-term debt and other obligations, less current portion	1,110,731	856,108
Fair value of derivatives embedded within convertible debt	126,932	144,042
Non-current employee benefits	55,308	55,055
Deferred income taxes, net	87,914	79,429
Payments due under the Master Settlement Agreement	22,257	20,094
Litigation accruals	22,619	24,718
Other liabilities	10,772	7,038
Total liabilities	1,654,936	1,402,776
Commitments and contingencies (Note 7)
Stockholders' deficiency:
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized	0	0
Common stock, par value $0.10 per share, 250,000,000 shares authorized, 123,842,329 and 123,792,329 shares issued and outstanding	12,384	12,379
Accumulated deficit	(261,370)	(210,113)
Accumulated other comprehensive income	(8,539)	(8,313)
Total Vector Group Ltd. stockholders' deficiency	(257,525)	(206,047)
Non-controlling interest	82,089	83,886
Total stockholders' deficiency	(175,436)	(122,161)
Total liabilities and stockholders' deficiency	$ 1,479,500	$ 1,280,615

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
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)	123,842,329	123,792,329
Common stock, shares outstanding (in shares)	123,842,329	123,792,329

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Total revenues		$ 438,273	$ 416,173	$ 819,073	$ 776,933
Cost of sales:
Total cost of sales		283,631	279,204	520,053	521,222
Operating, selling, administrative and general expenses		83,922	79,916	163,750	154,097
Litigation settlement and judgment expense		0	1,250	2,350	2,093
Restructuring charges		0	0	41	0
Operating income		70,720	55,803	132,879	99,521
Other income (expenses):
Interest expense		(36,369)	(31,761)	(67,089)	(63,507)
Change in fair value of derivatives embedded within convertible debt		7,416	5,256	17,110	11,716
Equity in earnings from real estate ventures		2,813	1,856	2,306	2,194
Equity in earnings (losses) from investments		1,089	(2,163)	(582)	(1,551)
Gain (loss) on sale of investment securities available for sale		139	(190)	706	12,839
Impairment of investment securities available for sale		(49)	0	(4,862)	0
Other, net		581	1,821	1,628	3,758
Income before provision for income taxes		46,340	30,622	82,096	64,970
Income tax expense		19,003	11,178	33,366	24,045
Net income		27,337	19,444	48,730	40,925
Net income attributed to non-controlling interest		(3,322)	(1,837)	(5,377)	(2,097)
Net income attributed to Vector Group Ltd.		$ 24,015	$ 17,607	$ 43,353	$ 38,828
Per basic common share:
Net income applicable to common shares attributed to Vector Group Ltd. (in dollars per share)		$ 0.20	$ 0.14	$ 0.36	$ 0.32
Per diluted common share:
Net income applicable to common shares attributed to Vector Group Ltd. (in dollars per share)		0.20	0.14	0.35	0.32
Cash distributions and dividends declared per share (in dollars per share)		$ 0.40	$ 0.38	$ 0.80	$ 0.76
Tobacco
Revenues:
Total revenues	[1]	$ 255,498	$ 254,890	$ 476,513	$ 482,975
Cost of sales:
Total cost of sales	[1]	168,607	174,867	305,345	331,897
Restructuring charges				41
Real Estate
Revenues:
Total revenues		182,765	161,022	342,512	293,278
Cost of sales:
Total cost of sales		115,017	103,870	214,695	188,228
E-Cigarettes
Revenues:
Total revenues		10	261	48	680
Cost of sales:
Total cost of sales		$ 7	$ 467	$ 13	$ 1,097

[1] Revenues and cost of sales include federal excise taxes of $106,861, $108,912, $197,707 and $206,271, respectively.

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Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Tax portion of revenues and cost of goods sold	$ 106,861	$ 108,912	$ 197,707	$ 206,271

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 27,337	$ 19,444	$ 48,730	$ 40,925
Net unrealized losses on investment securities available for sale:
Change in net unrealized (losses) gains	(820)	(4,493)	(5,454)	16,417
Net unrealized (gains) losses reclassified into net income	(90)	190	4,156	(12,839)
Net unrealized (losses) gains on investment securities available for sale	(910)	(4,303)	(1,298)	3,578
Net unrealized gains on long-term investments accounted for under the equity method:
Change in net unrealized gains	0	1,176	0	1,190
Net unrealized losses reclassified into net income	0	1,624	0	1,624
Net unrealized gains on long-term investments accounted for under the equity method	0	2,800	0	2,814
Net change in forward contracts	9	16	18	32
Net change in pension-related amounts
Net loss arising during the year	0	1,607	0	1,607
Amortization of loss	445	254	890	521
Net change in pension-related amounts	445	1,861	890	2,128
Other comprehensive (loss) income	(456)	374	(390)	8,552
Income tax effect on:
Change in net unrealized (losses) gains on investment securities	337	1,857	2,245	(6,603)
Net unrealized losses (gains) reclassified into net income on investment securities	37	(78)	(1,708)	5,309
Change in unrealized gains on long-term investments accounted for under the equity method	0	(478)	0	(484)
Net unrealized losses reclassified into net income on long-term investments accounted for under the equity method	0	(672)	0	(672)
Forward contracts	(4)	(7)	(7)	(13)
Pension-related amounts	(183)	(769)	(366)	(880)
Income tax benefit (provision) on other comprehensive income	187	(147)	164	(3,343)
Other comprehensive (loss) income, net of tax	(269)	227	(226)	5,209
Comprehensive income	27,068	19,671	48,504	46,134
Comprehensive income attributed to non-controlling interest	(3,322)	(1,837)	(5,377)	(2,097)
Comprehensive income attributed to Vector Group Ltd.	$ 23,746	$ 17,834	$ 43,127	$ 44,037

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Condensed Consolidated Statements of Stockholders' Deficiency - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		$ (122,161)
Beginning Balance (in shares)		123,792,329
Net income	$ 27,337	$ 48,730
Total other comprehensive loss	(269)	(226)
Comprehensive income	27,068	48,504
Distributions and dividends on common stock		(99,443)
Restricted stock grant		0
Stock-based compensation		4,838
Contributions from non-controlling interest		248
Distributions to non-controlling interest		(7,422)
Ending Balance	$ (175,436)	$ (175,436)
Beginning Balance (in shares)	123,842,329	123,842,329
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		$ 12,379
Beginning Balance (in shares)		123,792,329
Restricted stock grant (in shares)		50,000
Restricted stock grant		$ 5
Ending Balance	$ 12,384	$ 12,384
Beginning Balance (in shares)	123,842,329	123,842,329
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		$ 0
Distributions and dividends on common stock		(4,833)
Restricted stock grant		(5)
Stock-based compensation		4,838
Ending Balance	$ 0	0
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		(210,113)
Net income		43,353
Distributions and dividends on common stock		(94,610)
Ending Balance	(261,370)	(261,370)
Accumulated Other Comprehensive Income
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		(8,313)
Total other comprehensive loss		(226)
Ending Balance	(8,539)	(8,539)
Non-controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance		83,886
Net income		5,377
Contributions from non-controlling interest		248
Distributions to non-controlling interest		(7,422)
Ending Balance	$ 82,089	$ 82,089

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Statement of Cash Flows [Abstract]
Net cash provided by operating activities	$ 78,825	$ 83,885
Cash flows from investing activities:
Sale of investment securities	67,033	118,261
Maturities of investment securities	343	1,737
Purchase of investment securities	(56,691)	(113,595)
Proceeds from sale or liquidation of long-term investments	1,000	1,254
Purchase of long-term investments	(50)	(5,000)
Investments in real estate ventures	(11,806)	(34,857)
Distributions from investments in real estate ventures	17,983	0
Increase in cash surrender value of life insurance policies	(393)	(1,118)
Decrease (increase) in restricted assets	2,674	(7,934)
Issuance of notes receivable	0	(4,410)
Proceeds from sale of fixed assets	5	3
Capital expenditures	(7,615)	(5,379)
Pay downs of investment securities	4,926	3,530
Proceeds from sale of preferred securities	0	1,000
Investments in real estate, net	(81)	(12,502)
Net cash provided by (used in) investing activities	17,328	(59,010)
Cash flows from financing activities:
Proceeds from issuance of debt	243,282	22
Deferred financing costs	(6,600)	(625)
Repayments of debt	(2,917)	(3,374)
Borrowings under revolver	89,695	126,727
Repayments on revolver	(80,223)	(144,492)
Dividends and distributions on common stock	(97,846)	(92,778)
Contributions from non-controlling interest	248	0
Distributions to non-controlling interest	(7,422)	0
Proceeds from exercise of Vector options	0	1,219
Tax benefit of options exercised	0	384
Net cash provided by (used in) financing activities	138,217	(112,917)
Net increase (decrease) in cash and cash equivalents	234,370	(88,042)
Cash and cash equivalents, beginning of period	240,368	326,365
Cash and cash equivalents, end of period	$ 474,738	$ 238,323

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

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 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, 2015 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, 2015 Consolidated Balance Sheet. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest” (“ASU 2015-03”), which requires debt issuance costs to be reported in the balance sheet as a direct deduction from the face amount of the note. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015. This amendment must be applied retrospectively to all periods presented. The Company adopted the provisions of this ASU retrospectively in the first quarter of 2016, and adjusted all prior periods accordingly. The adoption of this ASU will simplify the presentation of debt issuance costs and reduce complexity without decreasing the usefulness of information provided to users of financial statements. 

The cumulative impacts of the application of the new ASU are presented in the table below:

	December 31, 2015
	As Previously Reported			ASU Adoption			As Revised
Other assets	$	51,261		$	(30,141	)	$	21,120
Total assets	$	1,310,756		$	(30,141	)	$	1,280,615
Notes payable, long-term debt and other obligations, less current portion	$	886,249		$	(30,141	)	$	856,108
Total liabilities	1,432,917			(30,141		)	1,402,776
Total stockholders' deficiency	(122,161		)	—			(122,161		)
Total liabilities and stockholders' deficiency	$	1,310,756		$	(30,141	)	$	1,280,615

Adoption of Equity Method. The Company adopted the equity method of accounting for its investments in Ladenburg Thalmann Financial Services Inc. (“LTS”) and Castle Brands Inc. (“Castle”) in 2015 because the Company determined that it had significant influence due to the evolution of the relationships with each company. In accordance with ASC 323-35-33, the Company has adjusted its condensed consolidated financial statements, retrospectively, on a step-by-step basis as if the equity method had been in effect since inception.

The cumulative impact of the retrospective application of the equity method of accounting for the two investments are presented in the table below:

	Three Months Ended									Six Months Ended
	June 30, 2015									June 30, 2015
	As Previously Reported			Revision			As Revised			As Previously Reported			Revision			As Revised
Operating, selling, administrative and general expenses	$	79,679		$	237		$	79,916		$	153,623		$	474		$	154,097
Operating income	56,040			(237		)	55,803			99,995			(474		)	99,521
Equity in losses from investments	(1,657		)	(506		)	(2,163		)	(1,694		)	143			(1,551		)
Other, net	1,525			296			1,821			3,421			337			3,758
Income before provision for income taxes	31,069			(447		)	30,622			64,964			6			64,970
Income tax expense	11,364			(186		)	11,178			24,043			2			24,045
Net income	19,705			(261		)	19,444			40,921			4			40,925
Net income attributed to Vector Group Ltd.	17,868			(261		)	17,607			38,824			4			38,828
Other comprehensive (loss) income, net of tax	(2,781		)	3,008			227			(782		)	5,991			5,209
Comprehensive income	16,924			2,747			19,671			40,139			5,995			46,134
Comprehensive income attributed to Vector Group Ltd.	$	15,087		$	2,747		$	17,834		$	38,042		$	5,995		$	44,037

(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 to the extent paid-in-capital is available. The Company’s stock dividends are recorded as stock splits and given retroactive effect to earnings per share for all periods presented.

(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 (e.g. federal excise taxes). 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 brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commission expenses are recognized concurrently with related revenues. Property management fees and rental commissions earned are recorded as revenue when the related services are performed and the earnings process is complete.

(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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income attributed to Vector Group Ltd.	$	24,015		$	17,607		$	43,353		$	38,828
Income attributed to participating securities	(784		)	(521		)	(1,417		)	(1,151		)
Net income available to common shares attributed to Vector Group Ltd.	$	23,231		$	17,086		$	41,936		$	37,677

Basic and diluted EPS were calculated using the following common shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Weighted-average shares for basic EPS	118,065,857	117,954,708	118,062,358	117,475,380
Plus incremental shares related to stock options and non-vested restricted stock	236,348	209,067	215,386	205,262
Weighted-average shares for diluted EPS	118,302,205	118,163,775	118,277,744	117,680,642

The following were outstanding during the three and six months ended June 30, 2016 and 2015, but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		24,895,477		24,895,477		25,334,835
Weighted-average conversion price	$	19.63	$	19.63	$	19.63	$	19.48

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

The Company has estimated the fair value of the embedded derivatives based principally on the results of a valuation model. A readily determinable fair value of the embedded derivatives is not available. 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. 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. At June 30, 2016, the range of estimated fair values of the Company's embedded derivatives was between $125,983 and $127,870. The Company recorded the fair value of its embedded derivatives at the approximate midpoint of the range at $126,932 as of June 30, 2016. At December 31, 2015, the range of estimated fair values of the Company's embedded derivatives was between $143,422 and $144,660. The Company recorded the fair value of its embedded derivatives at the midpoint of the range at $144,042 as of December 31, 2015. The estimated fair 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 investment in real estate ventures are subject to evaluation under ASU No. 2015-02, “Consolidation” (“ASU 2015-02”) which requires all legal entities to be evaluated as either a voting interest entity or a Variable Interest Entities (“VIE”). The guidance is effective for financial statements of public companies issued for fiscal years beginning after December 15, 2015. The Company has followed the decision tree set forth in ASC 810-10-05-6 in analyzing each of its investments in real estate ventures. The Company examines specific criteria and uses judgment when determining if the real estate venture is a VIE and then if the Company is the primary beneficiary of a VIE. Factors considered in the qualification of a VIE include sufficient equity investment at risk, disproportionate voting rights and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights, and characteristics of a controlling financial interest.

Accounting guidance requires the Company to perform the VIE primary-beneficiary assessment for entities determined to be VIEs. The Company is required to consolidate all VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that a reporting entity 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 affect the VIE's economic performance and (b) the obligation to absorb losses or the right to receive residual returns of 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					Six Months Ended
	June 30,					June 30,
	2016			2015		2016			2015
Interest and dividend income	$	1,452		$	1,795	$	2,776		$	3,535
Gain on long-term investment	—			24		—			224
Impairment of long-term investments	(921		)	—		(1,203		)	—
Other income (expense)	50			2		55			(1		)
Other income, net	$	581		$	1,821	$	1,628		$	3,758

(h) Other Current Liabilities:

Other current liabilities consisted of:

	June 30, 2016		December 31, 2015
Accounts payable	$	10,265	$	19,639
Accrued promotional expenses	22,269		24,816
Accrued excise and payroll taxes payable, net	16,784		26,556
Accrued interest	35,028		28,147
Commissions payable	9,885		11,008
Accrued salary and benefits	18,179		22,774
Other current liabilities	27,978		21,277
Total other current liabilities	$	140,388	$	154,217

(i) Goodwill and Other Intangible Assets:

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

	June 30, 2016		December 31, 2015
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	4,564		5,657
Total goodwill and other intangible assets, net	$	262,866	$	263,959

(j) Commitments:

Douglas Elliman Lease Extension.On March 31, 2016, Douglas Elliman extended the duration of an existing lease and entered into a sublease for additional space in New York. The agreement extended the lease term from 2018 to 2032. The new agreements increase the Company’s lease commitments by $0 in 2016, $1,164 in 2017, $1,412 in 2018, $3,733 in 2019, $5,394 in 2020 and $69,460 thereafter.

(k) New Accounting Pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies U.S. Generally Accepted Accounting Principles (“GAAP”) by requiring the following, among others: (1) all excess tax benefits and tax deficiencies are to be recognized as income tax expense or benefit on the income statement (excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period); (2) excess tax benefits are to be classified along with other income tax cash flows as an operating activity in the statement of cash flows; (3) in the area of forfeitures, an entity can still follow the current U.S. GAAP practice of making an entity-wide accounting policy election to estimate the number of awards that are expected to vest or may instead account for forfeitures when they occur; and (4) classification as a financing activity in the statement of cash flows of cash paid by an employer to the taxing authorities when directly withholding shares for tax withholding purposes. ASU 2016-09 is effective for the Company's fiscal year beginning January 1, 2017, including interim periods. Early application is permitted. The Company is currently assessing the impact the adoption of ASU 2016-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 does not change the core principle of the guidance stated in ASU 2014-09, instead, the amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. ASU 2016-08 will have the same effective date and transition requirements as the new revenue standard issued in ASU 2014-09. The Company is currently evaluating the method and impact the adoption of this ASU and ASU 2014-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 will be effective for the Company’s fiscal year beginning January 1, 2017 and subsequent interim periods. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) (“ASU 2016-06”). ASU 2016-06 clarifies the requirement for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under ASU 2016-06 is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. The amendments in ASU 2016-06 are effective for the Company's fiscal year beginning January 1, 2017, including interim periods. The Company is currently evaluating the method and impact the adoption of this ASU 2016-06 will have on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current U.S. GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning January 1, 2019 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Company's condensed consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such these investments may be measured at cost. ASU 2016-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on the Company’s condensed 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, 2017, 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 the Company's condensed consolidated financial statements.

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories consist of:

	June 30, 2016			December 31, 2015
Leaf tobacco	$	49,537		$	49,856
Other raw materials	3,586			3,578
Work-in-process	606			789
Finished goods	67,219			61,493
E-Cigarettes	67			80
Inventories at current cost	121,015			115,796
LIFO adjustments	(28,280		)	(29,280		)
	$	92,735		$	86,516

All of the Company's inventories at June 30, 2016 and December 31, 2015 are reported under the LIFO method. The $28,280 LIFO adjustment as of June 30, 2016 decreases the current cost of inventories by $18,863 for Leaf tobacco, $643 for Other raw materials, $33 for Work-in-Process, $8,736 for Finished goods and $5 for E-Cigarettes. The $29,280 LIFO adjustment as of December 31, 2015 decreased the current cost of inventories by $19,863 for Leaf tobacco, $643 for Other raw materials, $33 for Work-in-Process, $8,736 for Finished goods and $5 for E-Cigarettes.

Liggett enters into purchase commitments with third party providers 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 June 30, 2016, Liggett had tobacco purchase commitments of approximately $16,151. Liggett has a single source supply agreement for reduced ignition propensity cigarette paper through 2019.

The Company capitalizes the incremental prepaid cost of the MSA in ending inventory. Each period, 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 $15,865 and $15,796 at June 30, 2016 and December 31, 2015, respectively. Federal excise tax in inventory was $26,417 and $23,455 at June 30, 2016 and December 31, 2015.

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Investment Securities Available for Sale

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities Available for Sale

INVESTMENT SECURITIES AVAILABLE FOR SALE

The components of investment securities available for sale at June 30, 2016 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	38,172	$	17,343	$	(206	)	$	55,309
Mutual funds invested in fixed income securities	20,307		211		—			20,518
Marketable debt securities	83,865		1,162		—			85,027
Total investment securities available for sale	$	142,344	$	18,716	$	(206	)	$	160,854

The components of investment securities available for sale at December 31, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	47,502	$	19,833	$	(62	)	$	67,273
Mutual funds invested in fixed income securities	20,126		—		(15		)	20,111
Marketable debt securities	94,540		52		—			94,592
Total investment securities available for sale	$	162,168	$	19,885	$	(77	)	$	181,976

The table below summarizes the maturity dates of marketable debt securities at June 30, 2016.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	27,456	$	—	$	27,456	$	—
Corporate securities	35,660		2,271		33,389		—
U.S. mortgage-backed securities	7,343		—		49		7,294
Commercial mortgage-backed securities	3,675		—		—		3,675
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		7,985		—		—
Index-linked U.S. bonds	793		—		793		—
Total marketable debt securities by maturity dates	$	85,027	$	10,256	$	63,802	$	10,969

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
June 30, 2016
Marketable equity securities	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
December 31, 2015
Marketable equity securities	$	5,938	$	(62	)	$	—	$	—		$	5,938	$	(62	)
Mutual funds invested in fixed income securities	10,053		(15		)	—		—			10,053		(15		)
	$	15,991	$	(77	)	$	—	$	—		$	15,991	$	(77	)

Unrealized losses from mutual funds invested in fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses from equity 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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Gross realized gains on sales	$	206		$	520		$	955		$	14,084
Gross realized losses on sales	(67		)	(710		)	(249		)	(1,245		)
Gains (losses) on sale of investment securities available for sale	$	139		$	(190	)	$	706		$	12,839
Gross realized losses on other-than-temporary impairments	$	(49	)	$	—		$	(4,862	)	$	—

The Company recorded an “Other-than-temporary impairment” charge of $49 and $4,862 during the three and six months ended June 30, 2016. The largest component of the charge for the six months ended June 30, 2016 was $4,772 related to an investment in the common stock of 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.

Proceeds from investment securities sales totaled $67,033 and $118,261 and proceeds from early redemptions by issuers totaled $5,269 and $5,267 in the six months ended June 30, 2016 and 2015, respectively, mainly from sales of Corporate securities and U.S. Government securities.

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Long-Term Investments

6 Months Ended

Jun. 30, 2016

Long-term Investments [Abstract]

Long-Term Investments

LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

	June 30, 2016		December 31, 2015
Investments accounted at cost	$	39,028	$	41,231
Investments accounted for under the equity method	20,341		21,495
	$	59,369	$	62,726

(a) Cost-Method Investments:

Long-term investments accounted for at cost consisted of the following:

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investments partnerships	$	38,527	$	41,522	$	40,730	$	44,217
Real estate partnership	501		504		501		552
	$	39,028	$	42,026	$	41,231	$	44,769

The principal business of the investment partnerships is investing in investment securities and real estate. The estimated fair value of the investment partnerships was provided by the partnerships based on the indicated market values of the underlying assets or investment portfolio. The investments in these investment partnerships are illiquid and the ultimate realization of these investments is subject to the performance of the underlying partnership and its management by the general partners. In the future, the Company may invest in other investments, including limited partnerships, real estate investments, equity securities, debt securities, derivatives and certificates of deposit, depending on risk factors and potential rates of return.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

The Company has accounted for these investments using the cost method of accounting because the investments did not meet the requirements for equity method accounting.

The Company received cash distributions of $1,000 and $371 from the Company's investments in long-term investments under the cost method for the six months ended June 30, 2016 and 2015, respectively. The Company invested $5,000 in a reinsurance company during the six months ended June 30, 2015.

The long-term investments are carried on the consolidated balance sheet at cost. The fair value determination disclosed above

would be classified as Level 3 under fair value hierarchy disclosed in Note 11 if such assets were recorded on the consolidated balance sheet at fair value. The fair value determinations disclosed above were based on company assumptions, and information obtained from the partnerships based on the indicated market values of the underlying assets of the investment portfolio.

(b) Equity-Method Investments:

Long-term investments accounted for under the equity method consisted of the following:

	June 30, 2016		December 31, 2015
Indian Creek Investors LP	$	4,929	$	4,989
Boyar Value Fund	7,312		7,302
Ladenburg Thalmann Financial Services Inc.	8,100		9,204
Castle Brands, Inc.	—		—
	$	20,341	$	21,495

The Company's investments accounted for under the equity method include the following: Indian Creek Investors LP (“Indian Creek”), Boyar Value Fund (“Boyar”), Ladenburg Thalmann Financial Services Inc. (“LTS”) and Castle Brands Inc. (“Castle”). At June 30, 2016, the Company's ownership percentages in Indian Creek, Boyar, LTS and Castle were 20.13%, 30.65%, 7.75% and 7.91%, respectively. The Company accounted for its Indian Creek and Boyar interests as equity-method investments because the Company's ownership percentage meets the threshold for equity-method accounting. The Company accounted for its LTS and Castle interests as equity-method investments because, in accordance with generally accepted accounting principles, the Company has the ability to exercise significant influence over their operating and financial policies.

The principal business of Indian Creek is investing in investment securities. Fair value approximates carrying value. The estimated fair value of the investment partnership was provided by the partnership based on the indicated market values of the underlying assets or investment portfolio. The investment in the investment partnership is illiquid and the ultimate realization of the investment is subject to the performance of the underlying partnership and its management by the general partners.

The Company's investments under the equity method include an investment in Boyar. The value of the investment based on the quoted market price as of June 30, 2016 was $7,312, equal to its carrying value. Ladenburg Thalmann Fund Management, LLC, an indirect subsidiary of LTS, is the manager of Boyar.

At June 30, 2016, the aggregate values of the LTS and Castle investments based on the quoted market price were $33,491 and $9,250, respectively.

The Company received cash distributions of $572 and $1,754 from the Company's investments in long-term investments under the equity method for the six months ended June 30, 2016 and 2015, respectively. The Company recognized equity in earnings from long-term investments under the equity method of $1,089 for the three months ended June 30, 2016 and equity in losses from long-term investments under the equity method of $582 for the six months ended June 30, 2016. The Company recognized equity in losses from long-term investments under the equity method of $2,163 and $1,551 for the three and six months ended June 30, 2015, respectively. The Company has suspended its recognition of equity in losses from Castle to the extent such losses exceed its basis.

If it is determined that an other-than-temporary decline in fair value exists in long-term investments, the Company records an impairment charge with respect to such investment in its consolidated statements of operations. The Company will continue to perform additional assessments to determine the impact, if any, on the Company’s condensed consolidated financial statements. Thus, future impairment charges may occur.

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New Valley LLC

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

New Valley LLC

NEW VALLEY LLC

Residential Brokerage Business. New Valley is engaged in the real estate business and is seeking to acquire or invest in additional real estate properties or projects.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:

	June 30, 2016		December 31, 2015
10 Madison Square Park (1107 Broadway)	$	9,188	$	11,391
The Marquand (11 East 68th Street)	9,333		13,900
11 Beach Street	13,702		13,209
20 Times Square (701 Seventh Avenue)	16,487		14,985
111 Murray Street	25,308		25,567
160 Leroy Street	4,511		3,952
215 Chrystie Street	5,729		5,592
The Dutch (25-19 43rd Avenue)	1,129		1,077
Queens Plaza (23-10 Queens Plaza South)	16,834		16,177
87 Park (8701 Collins Avenue)	8,846		8,658
125 Greenwich Street	9,780		9,750
West Hollywood Edition (9040 Sunset Boulevard)	7,050		10,510
76 Eleventh Avenue	18,867		17,967
Monad Terrace	7,774		6,608
Takanasee	4,916		4,680
Condominium and Mixed Use Development	159,454		164,023
Maryland Portfolio	—		—
ST Portfolio	9,193		15,754
Apartment Buildings	9,193		15,754
Park Lane Hotel	21,138		19,697
Hotel Taiwana	7,786		7,069
Coral Beach and Tennis Club	3,162		3,159
Hotels	32,086		29,925
The Plaza at Harmon Meadow	3,682		5,449
Commercial	3,682		5,449
Other	1,724		2,017
Investments in real estate ventures	$	206,139	$	217,168

Condominium and Mixed-Use Development:

Condominium and mixed-use development investments range in ownership percentage from 3.1% to 49.5%. New Valley recorded net equity in earnings from real estate ventures of $2,962 and $1,779 for the three and six months ended June 30, 2016 from its condominium and mixed-used developments. For the three months ended June 30, 2016 equity in earnings from real estate related to $3,788 in equity earnings from New Valley's proportionate share of the sale of condominium units at 10 Madison Square Park offset by equity in losses of $826 from the other condominiums and mixed-use development projects. For the six months ended June 30, 2016 equity in earnings from real estate was related to $4,211 in equity earnings from New Valley's proportionate share of the sale of condominium units at 10 Madison Square Park and $34 equity in earnings from other condominiums and mixed-use development projects offset by equity losses of $962 at the Marquand, $160 at 11 Beach Street, $247 at 111 Murray Street, $144 at 215 Chrystie Street, $122 at Queens Plaza, $250 at 87 Park, $177 at West Hollywood Edition, and $404 at Monad Terrace. New Valley recorded equity in earnings from real estate ventures of $138 and $675 for the the three and six months ended June 30, 2015. The Company recorded $1,501 of equity in earnings related to its proportionate share of the Marquand’s equity earnings from the sale of three of its units for the six months ended June 30, 2015. The Company also recorded $236 of equity in earnings from Chelsea Eleven for a distribution of excess amounts held back in 2012 for final expenses of the investment for the six months ended June 30, 2015.

During the six months ended June 30, 2016, New Valley made capital contributions totaling $8,801 related to ventures where New Valley previously held an investment, primarily at 20 Times Square, 160 Leroy Street, West Hollywood Edition, 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 six months ended June 30, 2015, New Valley made capital contributions totaling $27,091 primarily related to 215 Chrystie Street, 76 Eleventh Avenue and Monad Terrace. 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.

During the six months ended June 30, 2016, New Valley received distributions of $19,985 primarily related to 10 Madison Square West, the Marquand, West Hollywood Edition and income from marketing fees paid by 125 Greenwich Street. During the six months ended June 30, 2015, New Valley received distributions of $236 from its investment in Chelsea Eleven, which sold its last unit in 2012, for excess amounts held back in 2012 for final expenses of the investment.

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 $140,667 at June 30, 2016.

New Valley capitalized $4,836 of interest expense into the carrying value of its ventures whose projects were currently under development during the six months endedJune 30, 2016.

Douglas Elliman has been engaged by the developers as the sole broker or the co-broker for several of the real estate development projects that New Valley owns an interest in through its joint venture investments. Douglas Elliman had gross commissions of approximately $5,674 and  $8,079 for the three and six months endedJune 30, 2016 from these projects.

Apartment Buildings:

Apartment building investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded equity in earnings from real estate ventures of $1,630 and $2,146 for the three and six months ended June 30, 2016, primarily related to the ST Portfolio apartment portfolio. In 2015, ST Portfolio sold one (Highgrove) of its two remaining Class A multi-family buildings. New Valley recorded equity in earnings from real estate ventures of $1,848 and $1,801 for the three and six months ended June 30, 2015, related to the ST Portfolio. In 2015, ST Portfolio sold one (Phoenix) of its three remaining Class A multi-family buildings. New Valley received distributions of $8,707 during the six months endedJune 30, 2016, primarily related to ST Portfolio and Maryland Portfolio. New Valley received distributions of $493 during the six months ended June 30, 2015, primarily related to the Maryland Portfolio. New Valley has suspended its recognition of equity losses in Maryland Portfolio to the extent such losses exceed its basis. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $9,193 at June 30, 2016.

Hotels:

Hotel investments range in ownership percentage from 5.2% to 49.0%. New Valley recorded equity in losses from real estate ventures of $189 and $844 for the three and six months ended June 30, 2016, related to hotel operations. New Valley recorded equity in losses from real estate ventures of $261 and $1,006 for the three and six months ended June 30, 2015. New Valley made capital contributions totaling $3,005 for the six months ended June 30, 2016, related to the Park Lane Hotel and Coral Beach and Tennis Club. New Valley made capital contributions totaling $1,980 for the six months ended June 30, 2015, related to the Park Lane Hotel and Coral Beach and Tennis Club. New Valley's maximum exposure to loss as a result of its investments in hotels was $32,086 at June 30, 2016.

Commercial:

New Valley recorded equity in losses from real estate ventures of $1,744 and $1,532 for the three and six months ended June 30, 2016, related to shopping center rental operations. New Valley recorded equity in earnings from real estate ventures of $27 for the three and six months ended June 30, 2015, related to shopping center rental operations. New Valley received distributions totaling $235 for the six months ended June 30, 2016, related to Harmon Meadow. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $3,682 at June 30, 2016.

Other:

Other investments in real estate ventures relate to a 50% investment in an insurance consulting company owned by Douglas Elliman.

Investments in Real Estate, net:

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

	June 30, 2016		December 31, 2015
Escena, net	$	10,644	$	10,716
Sagaponack	12,684		12,602
Investments in real estate, net	$	23,328	$	23,318

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

	June 30, 2016			December 31, 2015
Land and land improvements	$	8,907		$	8,907
Building and building improvements	1,874			1,875
Other	2,001			1,923
	12,782			12,705
Less accumulated depreciation	(2,138		)	(1,989		)
	$	10,644		$	10,716

New Valley recorded operating losses of $299 and $173 for the three months ended June 30, 2016 and 2015, respectively, from Escena. New Valley recorded operating income of and $209 and $552 for the six months ended June 30, 2016 and 2015, respectively, from Escena.

Investment in Sagaponack. In April 2015, New Valley 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 condensed consolidated financial statements of the Company. As of June 30, 2016, the assets of Sagaponack consisted of land and land improvements of $12,684.

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Notes Payable, Long Term Debt and Other Obligations

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Notes Payable, Long-Term Debt and Other Obligations

NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

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

	June 30, 2016			December 31, 2015
Vector:
7.75% Senior Secured Notes due 2021, including premium of $15,391 and $8,014	$	850,391		$	608,014
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $121,788 and $132,119*	108,212			97,881
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $79,010 and $86,136*	179,740			172,614
Liggett:
Revolving credit facility	12,808			3,213
Term loan under credit facility	3,147			3,269
Equipment loans	6,866			9,716
Other	354			461
Notes payable, long-term debt and other obligations	1,161,518			895,168
Less:
Debt issuance costs	(34,172		)	(30,141		)
Total notes payable, long-term debt and other obligations	1,127,346			865,027
Less:
Current maturities	(16,615		)	(8,919		)
Amount due after one year	$	1,110,731		$	856,108

______________________

* The fair value of the derivatives embedded within the 7.5% Variable Interest Senior Convertible Notes ($61,998 at June 30, 2016 and $72,083 at December 31, 2015, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($64,934 at June 30, 2016 and $71,959 at December 31, 2015, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

7.75% Senior Secured Notes due 2021 - Vector:

On May 9, 2016, the Company completed the sale of an additional $235,000 principal amount of its 7.75% Senior Secured Notes due 2021 for a price of 103.50% in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933 (the "Securities Act"). The Company received net proceeds of approximately $236,900 after deducting underwriting discounts, commissions, fees and offering expenses. The net proceeds will be used for general corporate purposes, including for additional investments in real estate and in the Company's tobacco business. The Company will amortize the deferred costs and debt premium related to the additional Senior Secured Notes over the estimated remaining life of the debt.

In August 2016, the Company completed an offer to exchange the 7.75% Senior Secured Notes issued in May 2016 for an equal amount of newly issued 7.75% Senior Secured Notes due 2021. The new 7.75% Senior Secured Notes have substantially the same terms as the original notes, except that the new 7.75% Senior Secured Notes have been registered under the Securities Act.

6.75% Variable Interest Senior Convertible Note due 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 June 30, 2016, a total of $15,955 was outstanding under the revolving and term loan portions of the credit facility. Availability, as determined under the facility, was approximately $44,000 based on eligible collateral at June 30, 2016.

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

The conversion rates for all convertible debt outstanding as of June 30, 2016 and December 31, 2015, are summarized below:

	June 30, 2016			December 31, 2015
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
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				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Amortization of debt discount, net	$	8,653	$	6,213	$	16,609	$	11,840
Amortization of debt issuance costs	1,401		1,022		2,569		1,988
	$	10,054	$	7,235	$	19,178	$	13,828

Fair Value of Notes Payable and Long-Term Debt:

	June 30, 2016					December 31, 2015
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	1,161,518	(1)	$	1,513,012	$	895,168	(1)	$	1,297,875

______________________

⁽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. The Company used the quoted market prices as of June 30, 2016 to determine the fair value of its publicly-traded notes and debentures. The carrying value of the credit facility and term loan is equal to the fair value. The fair value of the equipment loans and other obligations was determined by calculating the present value of the required future cash flows. 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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Contingencies

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and 2015, Liggett incurred tobacco product liability legal expenses and costs totaling $1,707 and $3,158, respectively. For the six months ended June 30, 2016 and 2015, Liggett incurred tobacco product liability legal expenses and costs totaling $5,878 and $5,713, respectively. The tobacco product liability legal expenses and 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 the probability of a loss being incurred and 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 of the Putney, Calloway, Boatright, Buchanan and Ward cases Liggett, as of June 30, 2016, had secured approximately $10,767 in bonds.

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 but in any event, the maximum amount of any such bond for an appeal in the Florida state courts will be no greater than $5,000. 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 more than 100Engle progeny cases. A number of the judgments have been affirmed on appeal and satisfied by the defendants. As of June 30, 2016, 24Engle 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 nine in favor of Liggett. In four of the cases, punitive damages were awarded against Liggett (although in Calloway, the punitive damages award was reversed and remanded to the trial court). 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, under certain circumstances, Liggett may have to pay more than its proportionate share of any bonding or judgment related amounts. Several of the judgments against Liggett remain on appeal. Except as discussed in this Note 7 regarding the cases where an adverse verdict against Liggett remains 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, however, Liggett has entered into settlement discussions in individual cases or groups of cases, where Liggett has determined it was in its best interest to do so, and it may continue to do so in the future, including with respect to the remaining Engle progeny cases. In October 2013, Liggett announced a settlement of the claims of over 4,900Engle progeny plaintiffs (see Engle Progeny Settlement below). As of June 30, 2016, Liggett (and in certain cases the Company) had, on an individual basis, settled 175Engle progeny cases for approximately $5,999 in the aggregate. One of those settlements occurred in the second quarter of 2016.

Individual Actions

As of June 30, 2016, there were 38 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 the remaining Engle progeny cases or the 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
Maryland	13
Florida	11
New York	7
Louisiana	3
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, including the claims of all plaintiffs with cases pending in federal court, 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 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 245 plaintiffs’ claims remain pending in state court. 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 June 30, 2016, 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. Both sides sought discretionary review from the Florida Supreme Court. In February 2016, the Florida Supreme Court reinstated the jury's verdict. The defendants moved for clarification of that order, which was granted in March 2016. The court clarified that it reversed the district court's decision regarding the statute of repose only, leaving the remaining portions of the decision intact. The case will be remanded to the trial court for proceedings consistent with those portions of the district court's decision that were not reversed.
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 merits judgment. Subsequently, the trial court entered a joint and several final judgment on attorneys' fees and costs for $981 and defendants appealed that judgment.
May 2012	Calloway v. R.J. Reynolds	Broward	1,530	—	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. On January 6, 2016, the Fourth District Court of Appeal reversed in part, including the $7,600 punitive damages award against Liggett, and remanded the case to the trial court for a new trial on certain issues. Both sides have moved for rehearing.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	Liggett satisfied the judgment and the case is concluded.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	—	—	In May 2013, the jury awarded compensatory damages in the amount of $2,055 and apportioned 10% of the fault to Liggett ($205). Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed and defendants cross-appealed. Oral argument occurred on June 7, 2016. A decision is pending.
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	—	—	In August 2014, the jury awarded compensatory damages in the amount of $3,123 and apportioned 1% of the fault to Liggett ($31). In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	Liggett satisfied the judgment and the case is concluded.
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. Defendants appealed and plaintiff cross-appealed.
June 2015	Caprio v. R.J. Reynolds	Broward	—	—	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The jury returned a verdict of $559 in economic damages. The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  Defendants appealed.
Total Damages Awarded:			28,866	10,800
Amounts accrued, paid or compromised:			(24,328)	(10,500)
Damages remaining on Appeal:			$4,538	$300
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault and only include Liggett's jury allocated share, regardless of whether a judgment was joint and several. 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 June 30, 2016, Liggett paid $39,773, including interest and attorneys' fees, to satisfy the judgments in the following Engle progeny cases: Lukacs, Campbell, Douglas, Clay,Tullo, Ward, Rizzuto, Lambert and Buchanan.

The Company’s current potential range of loss in the remaining cases on appeal is between $0 and $4,838 in the aggregate, plus interest and attorneys' fees, however, this is only an estimate and final damages in any case might increase as a result of pending appeals. 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. 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 Rey, 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 Douglas, a state court case, 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 state court case, in April 2015, 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, a federal case,the Eleventh Circuit held that federal law impliedly preempts use of the res judicataEngle findings to establish claims for strict liability or negligence. In February 2016, the Eleventh Circuit Court of Appeals vacated the panel’s opinion and granted Plaintiff’s motion for rehearing en banc.  Defendants filed a motion requesting that the court enter a briefing order directing the parties to address both implied preemption and whether the application of the Engle findings violates federal due process.  That motion was granted. Oral argument occurred in June 2016 and a decision is pending.

Maryland Cases

Liggett is currently a defendant in 13 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. On May 9, 2016, the Court of Appeals for Maryland (Maryland's highest court) heard oral argument on the appeal of the intermediate appellate court's decision. On July 5, 2016, the Court of Appeals ruled that joinder of tobacco and asbestos cases may be possible in certain circumstances, but plaintiffs must demonstrate at the trial court level how such cases may be joined while providing appropriate safeguards to prevent embarrassment, delay, expense or prejudice to defendants and "the extent to which, if at all, the special procedures applicable to asbestos cases should extend to tobacco companies." Other than providing guidance, the Court of Appeals remanded these issues to be determined at the trial court level. It is possible that Liggett and other tobacco company defendants will not be dismissed from pending synergy exposure cases, and may be named as defendants 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 November 2015, in Hausrath (NY state court), the court entered a case management order providing discovery deadlines. A status conference is scheduled for August 2, 2016. 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 June 30, 2016, 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.

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 date for the consolidated trials for January 9, 2017. 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. On May 23, 2016, the trial court ruled that the case may proceed against Liggett. Liggett intends to seek appellate review of this decision.It is estimated that Liggett could be a defendant in approximately 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 June 30, 2016, 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. In May 2015, the court of appeals issued an opinion on the legality of the "corrective statements," affirming them in part and reversing them in part. The implementation of the “corrective statements” is uncertain as proceedings are ongoing.

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

Upcoming Trials

As of June 30, 2016, there were 16 Engle progeny cases and two Individual Actions scheduled for trial through June 30, 2017, where Liggett (and/or the Company) is a named defendant. Trial dates are, however, subject to change.

MSA and Other State Settlement Agreements

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

In November 1998, Philip Morris, R.J. Reynolds and two other companies (the “Original Participating Manufacturers” or “OPMs”) and Liggett and Vector Tobacco (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 and Vector Tobacco 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 including a "Non-Participating Manufacturers Adjustment" or "NPM Adjustment"). These annual payments are allocated based on unit volume of domestic cigarette shipments. The payment obligations under the MSA are the several, and not joint, obligation of each Participating Manufacturer and are not the responsibility of any parent or affiliate of a Participating Manufacturer.

Liggett has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 1.65% of total cigarettes sold in the United States. Vector Tobacco has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 0.28% of total cigarettes sold in the United States. Liggett and Vector Tobacco’s domestic shipments accounted for 3.3% of the total cigarettes sold in the United States in 2015. 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 30, 2015, Liggett and Vector Tobacco pre-paid $100,000 of their approximate$115,000 2015 MSA obligation, the balance of which was paid in April 2016.

Certain MSA Disputes

NPM Adjustment.  Liggett and Vector Tobacco contend that they are entitled to an NPM Adjustment for each year from 2003 - 2015. The NPM Adjustment is a potential adjustment to annual MSA payments, available when the Participating Manufacturers suffer a market share loss to NPMs for a particular year and an economic consulting firm selected pursuant to the MSA determines that the MSA was a “significant factor contributing to” that loss. A Settling State that has “diligently enforced” its qualifying escrow statute in the year in question may be able to avoid its allocable share of the NPM Adjustment. For 2003 - 2015, 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 either paid subject to dispute, withheld payment or paid into a disputed payment account, the amounts associated with these NPM Adjustments.

The two requirements for application of the NPM Adjustment, a market share loss and a finding or agreement that the MSA was a significant factor in that loss, have been satisfied, and the Participating Manufacturers are engaged in disputes with certain of the Settling States over whether they diligently enforced their respective escrow statutes in each of the years from 2003 - 2014. After several years of litigation over whether the MSA’s arbitration clause required a multistate arbitration of the NPM Adjustment dispute, 48 of 49 state courts ultimately compelled the states to participate in a single, multistate arbitration of the 2003 NPM Adjustment. Notwithstanding, many states continued to refuse to arbitrate and agreed to do so only after the Participating Manufacturers agreed to a 20% reduction in their 2003 NPM Adjustment claims.

The arbitration for the 2003 NPM Adjustment began in June 2010. During the proceedings, the Participating Manufacturers decided not to contest the diligent enforcement of 16 states, with a combined allocable share of approximately 14%.

While the 2003 arbitration was underway, the Participating Manufacturers entered into a term sheet with 22 states settling the NPM Adjustment for 2003 - 2012 and agreeing to terms to address the NPM Adjustment with respect to those states for future years. The parties have been working towards converting the term sheet into a final settlement agreement.

The Participating Manufacturers continued to contest the diligence of 15 states relating to the 2003 NPM Adjustment. In September 2013, the panel found that six of those states did not diligently enforce their MSA escrow statutes in 2003.

Two of the states found non-diligent, Kentucky and Indiana, agreed to settle the dispute and enter into the term sheet described above.

The remaining four non-diligent states pursued motions in their respective state courts seeking to vacate or reduce the amount of the arbitration award. The Pennsylvania and Maryland courts refused to vacate the award but reduced the recovery by approximately 50%. State court appellate proceedings in Pennsylvania and Maryland are now exhausted but the Participating Manufacturers have filed petitions for certiorari seeking further review in the United States Supreme Court. The remaining two challenges to the 2003 arbitration award, in Missouri and New Mexico, remain pending in state court. In Missouri, the appellate court reversed the trial court, which had reduced the arbitration award, and reinstated the full award. The Missouri Supreme Court granted a discretionary appeal of that decision, and briefing is currently underway. There has been no decision in New Mexico.     

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 settlements and arbitration award described above, Liggett and Vector Tobacco reduced cost of sales in the aggregate by $22,356 for years 2013 - 2015. Liggett and Vector Tobacco maybe entitled to further adjustments for 2015 forward. The remaining NPM Adjustment accrual of approximately $20,000 at June 30, 2016 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. As of June 30, 2016, there remains approximately $28,600 in the disputed payments account relating to Liggett's 2011 - 2015 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. The dispute over the NPM Adjustment for 2015 remains to be arbitrated with all the states. The arbitration panel for the 2004 NPM Adjustment dispute has been selected and that proceeding has commenced.

“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 owed approximately $16,000 for years 2001 - 2013. In June 2016, the independent auditor issued revised calculations indicating that Liggett owed approximately $8,100 for years 2001 - 2013. Based on these revised calculations Liggett is fully accrued for this matter although Liggett continues to dispute the independent auditor’s calculation.

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 settlements with United States Tobacco Company, Liggett’s payment obligations to those four 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.

On January 12, 2016, the Attorney General for Mississippi commenced an action against Liggett in state court in Jackson County, Mississippi (Chancery Division) to enforce the settlement agreement among Liggett, Mississippi and several other states, alleging that Liggett is liable to Mississippi for at least $26,000 (including interest) plus attorneys' fees and punitive damages. Discovery is underway. Liggett may be required to make additional payments to Texas or Mississippi 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 six months ended June 30, 2016 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, 2016	$	29,241		$	22,904		$	52,145		$	20,094	$	24,718		$	44,812
Expenses	42,637			2,583			45,220			—		—			—
Change in MSA obligations capitalized as inventory	69			—			69			—		—			—
Payments	(12,847		)	(25,545		)	(38,392		)	—		—			—
Reclassification to/(from) non-current liabilities	(2,163		)	3,252			1,089			2,163		(3,252		)	(1,089		)
Interest on withholding	35			320			355			—		1,153			1,153
Balance as of June 30, 2016	$	56,972		$	3,514		$	60,486		$	22,257	$	22,619		$	44,876

The activity in the Company's accruals for the MSA and tobacco litigation for the six months ended June 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	53,435			2,490			55,925			—		(195		)	(195		)
Change in MSA obligations capitalized as inventory	1,011			—			1,011			—		—			—
Payments	(18,142		)	(5,645		)	(23,787		)	—		—			—
Reclassification from non-current liabilities	—			3,305			3,305			—		(3,305		)	(3,305		)
Interest on withholding	—			178			178			—		1,244			1,244
Balance as of June 30, 2015	$	62,626		$	3,477		$	66,103		$	25,809	$	23,444		$	49,253

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 affect 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 Convenience Distribution 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. Under the agreement, Liggett Vector Brands has agreed to pay a portion of losses incurred by the surety under the bond program, with a maximum loss exposure of $500. The Company believes the fair value of Liggett Vector Brands’ obligation under the agreement was immaterial at June 30, 2016.

In addition to the foregoing, Douglas Elliman Realty, LLC is subject to numerous proceedings, lawsuits and claims in connection withitsordinary business activities. Many of these matters are covered by insurance.

Liggett was contacted in October 2015, by one of its software vendors, who suggested that Liggett needed to purchase additional software licenses from it.  Liggett believes that its use of the vendor's software is in compliance with the licenses previously purchased by Liggett.  In January 2016, the software vendor requested to audit Liggett’s use of the relevant software.  In response, Liggett has provided details of its use of the software and is continuing to cooperate with requests for information.

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

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2016

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						Pension Benefits						Other Postretirement Benefits						Other Postretirement Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015
Service cost — benefits earned during the period	$	137		$	133		$	274		$	265		$	1		$	2		$	2		$	4
Interest cost on projected benefit obligation	1,355			1,280			2,710			2,598			97			93			194			185
Expected return on assets	(1,519		)	(1,888		)	(3,038		)	(3,813		)	—			—			—			—
Settlement loss	—			1,607			—			1,607			—			—			—			—
Amortization of net loss (gain)	464			278			928			569			(19		)	(24		)	(38		)	(48		)
Net expense	$	437		$	1,410		$	874		$	1,226		$	79		$	71		$	158		$	141

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Restructuring

6 Months Ended

Jun. 30, 2016

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

The following table presents the activity under the Tobacco segment restructuring plan for the six months ended June 30, 2016:

	Employee Severance and Benefits			Contract Termination/Exit Costs			Other			Total
Accrual balance as of January 1, 2016	$	422		$	48		$	20		$	490
Restructuring charges	—			41			—			41
Utilized	(315		)	(89		)	(20		)	(424		)
Accrual balance as of June 30, 2016	$	107		$	—		$	—		$	107

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Income Taxes

6 Months Ended

Jun. 30, 2016

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					Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
Income before provision for income taxes	$	46,340	$	30,622		$	82,096	$	64,970
Income tax expense using estimated annual effective income tax rate	18,793		11,347			33,317		24,145
Changes in effective tax rates	210		(78		)	—		—
Impact of discrete items, net	—		(91		)	49		(100		)
Income tax expense	$	19,003	$	11,178		$	33,366	$	24,045

The discrete item for the six months ended June 30, 2016 is primarily related to the results of recent state income tax audits. The discrete item for the six months ended June 30, 2015 is primarily related to the rate differential in other comprehensive income and the results of a recent state income tax audit.

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Investments and Fair Value Measurements

6 Months Ended

Jun. 30, 2016

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 were as follows:

	Fair Value Measurements as of June 30, 2016
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	336,845	$	336,845	$	—	$	—
Commercial paper	42,044		—		42,044		—
Certificates of deposit	2,976		—		2,976		—
Bonds	10,767		10,767		—		—
Investment securities available for sale
Equity securities	55,309		55,309		—		—
Mutual funds invested in fixed income securities	20,518		20,518		—		—
Fixed income securities
U.S. government securities	27,456		—		27,456		—
Corporate securities	35,660		—		35,660		—
U.S. government and federal agency	7,343		—		7,343		—
Commercial mortgage-backed securities	3,675		—		3,675		—
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		—		7,985		—
Index-linked U.S. bonds	793		—		793		—
Total fixed income securities	85,027		—		85,027		—
Total investment securities available for sale	160,854		75,827		85,027		—
Total	$	553,486	$	423,439	$	130,047	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	126,932	$	—	$	—	$	126,932
Nonrecurring fair value measurements
Long-term investments (1)	$	6,396					$	6,396	$	(1,203	)

(1) Long-term investments with a carrying amount of $7,599 were written down to their fair value of $6,396, resulting in an impairment charge of $1,203, which was included in earnings.

	Fair Value Measurements as of December 31, 2015
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	93,915	$	93,915	$	—	$	—
Certificates of deposit	3,469		—		3,469		—
Bonds	12,767		12,767		—		—
Investment securities available for sale
Equity securities	67,273		67,273		—		—
Mutual funds invested in fixed income securities	20,111		20,111		—		—
Fixed income securities
U.S. government securities	28,132		—		28,132		—
Corporate securities	41,561		—		41,561		—
U.S. government and federal agency	5,790		—		5,790		—
Commercial mortgage-backed securities	8,728		—		8,728		—
U.S. asset-backed securities	8,276		—		8,276		—
Index-linked U.S. bonds	2,105		—		2,105		—
Total fixed income securities	94,592		—		94,592		—
Total investment securities available for sale	181,976		87,384		94,592		—
Total	$	292,127	$	194,066	$	98,061	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	144,042	$	—	$	—	$	144,042
Nonrecurring fair value measurements
Long-term investments (1)	$	11,189					$	11,189	$	(811	)
Investments in real estate, net (2)	3,780						3,780		(230		)
	$	14,969					$	14,969	$	(1,041	)

(1) Long-term investments with a carrying amount of $12,000 were written down to their fair value of $11,189, resulting in an impairment charge of $811, which was included in earnings.

(2) Investment in real estate, net with a carrying value of $4,010 was written down to its fair value of $3,780, resulting in an impairment charge of $230, which was included in earnings.

The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution. 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 credit spread 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 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 unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at June 30, 2016:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2016		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	126,932	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.42
				Convertible trading price (as a percentage of par value)	110.88		%
				Volatility	19.33		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 7.0% (6.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	144,042	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	23.59
				Convertible trading price (as a percentage of par value)	114.31		%
				Volatility	18.30		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	5.0% - 5.5% (5.25%)

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company's significant business segments for the three and six months ended June 30, 2016 and 2015 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, 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 and non-controlling interests for the three and six months ended June 30, 2016 and 2015 were as follows:

							Real		Corporate
	Tobacco			E-Cigarettes			Estate		and Other			Total
Three months ended June 30, 2016
Revenues	$	255,498		$	10		$	182,765	$	—		$	438,273
Operating income (loss)	66,016			(91		)	11,706		(6,911		)	70,720
Equity in earnings from real estate ventures	—			—			2,813		—			2,813
Depreciation and amortization	2,499			—			2,943		428			5,870
Three months ended June 30, 2015
Revenues	$	254,890		$	261		$	161,022	$	—		$	416,173
Operating income (loss)	56,215		(1)	(2,400		)	6,892		(4,904		)	55,803
Equity in earnings from real estate ventures	—			—			1,856		—			1,856
Depreciation and amortization	2,931			—			3,076		435			6,442
Six months ended June 30, 2016
Revenues	$	476,513		$	48		$	342,512	$	—		$	819,073
Operating income (loss)	127,499		(2)	(284		)	19,380		(13,716		)	132,879
Equity in earnings from real estate ventures	—			—			2,306		—			2,306
Depreciation and amortization	4,939			—			5,225		870			11,034
Capital expenditures	3,716			—			3,873		26			7,615
Six months ended June 30, 2015
Revenues	$	482,975		$	680		$	293,278	$	—		$	776,933
Operating income (loss)	105,885		(3)	(5,564		)	9,043		(9,843		)	99,521
Equity in earnings from real estate ventures	—			—			2,194		—			2,194
Depreciation and amortization	5,867			—			5,984		872			12,723
Capital expenditures	2,350			—			3,029		—			5,379

⁽¹⁾  Operating income includes $1,250 of litigation settlement expense and $1,607 of pension settlement expense.

⁽²⁾  Operating income includes $2,350 of litigation settlement expense, and $41 of restructuring expense.

⁽³⁾  Operating income includes $2,093 of litigation settlement expense and $1,607 of pension settlement expense.

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Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2016

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 $835,000 principal amount of its 7.75% Senior Secured Notes due 2021 that are guaranteed subject to certain customary automatic release provisions on a joint and several basis by all of the 100% owned domestic subsidiaries of the Company that are engaged in the conduct of its cigarette businesses. (See Note 6). 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 June 30, 2016 and December 31, 2015, the related Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2016 and the related Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2016 and 2015 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

				June 30, 2016
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	335,034		$	32,246	$	107,458	$	—		$	474,738
Investment securities available for sale	120,283			40,571		—		—			160,854
Accounts receivable - trade, net	—			15,015		10,061		—			25,076
Intercompany receivables	16,435			—		—		(16,435		)	—
Inventories	—			92,735		—		—			92,735
Income taxes receivable, net	12,342			—		—		(12,124		)	218
Restricted assets	—			8,523		914		—			9,437
Other current assets	618			3,794		35,751		—			40,163
Total current assets	484,712			192,884		154,184		(28,559		)	803,221
Property, plant and equipment, net	1,452			51,122		19,330		—			71,904
Investments in real estate, net	—			—		23,328		—			23,328
Long-term investments	58,414			454		501		—			59,369
Investments in real estate ventures	—			—		206,139		—			206,139
Investments in consolidated subsidiaries	517,365			—		—		(517,365		)	—
Restricted assets	1,720			7,666		—		—			9,386
Goodwill and other intangible assets, net	—			107,511		155,355		—			262,866
Prepaid pension costs	—			21,302		—		—			21,302
Other assets	7,621			12,002		2,362		—			21,985
Total assets	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	16,523	$	92	$	—		$	16,615
Current portion of employee benefits	—			914		—		—			914
Intercompany payables	—			585		15,850		(16,435		)	—
Income taxes payable, net	—			11,501		623		(12,124		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			60,486		—		—			60,486
Other current liabilities	44,520			55,350		40,518		—			140,388
Total current liabilities	44,520			145,359		57,083		(28,559		)	218,403
Notes payable, long-term debt and other obligations, less current portion	1,104,171			6,338		222		—			1,110,731
Fair value of derivatives embedded within convertible debt	126,932			—		—		—			126,932
Non-current employee benefits	40,075			15,233		—		—			55,308
Deferred income taxes, net	7,826			35,138		44,950		—			87,914
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	5,285			45,010		5,353		—			55,648
Total liabilities	1,328,809			247,078		107,608		(28,559		)	1,654,936
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(257,525		)	145,863		371,502		(517,365		)	(257,525		)
Non-controlling interest	—			—		82,089		—			82,089
Total stockholders' (deficiency) equity	(257,525		)	145,863		453,591		(517,365		)	(175,436		)
Total liabilities and stockholders' deficiency	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500

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
Investments in real estate, 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	7,582			11,769		1,769		—			21,120
Total assets	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615
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	848,368			7,519		221		—			856,108
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	1,074,662			244,029		100,750		(16,665		)	1,402,776
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	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,648		$	182,765		$	(140	)	$	438,273
Expenses:
Cost of sales	—			168,614			115,017			—			283,631
Operating, selling, administrative and general expenses	9,019			18,943			56,100			(140		)	83,922
Management fee expense	—			2,663			—			(2,663		)	—
Operating (loss) income	(9,019		)	65,428			11,648			2,663			70,720
Other income (expenses):
Interest expense	(35,522		)	(843		)	(4		)	—			(36,369		)
Change in fair value of derivatives embedded within convertible debt	7,416			—			—			—			7,416
Equity in earnings from real estate ventures	—			—			2,813			—			2,813
Equity in earnings (loss) from investments	1,097			(8		)	—			—			1,089
Gain on sale of investment securities available for sale	139			—			—			—			139
Impairment of investment securities available for sale	(49		)	—			—			—			(49		)
Equity in earnings in consolidated subsidiaries	46,441			—			—			(46,441		)	—
Management fee income	2,663			—			—			(2,663		)	—
Other, net	(93		)	244			430			—			581
Income before provision for income taxes	13,073			64,821			14,887			(46,441		)	46,340
Income tax benefit (expense)	10,942			(24,907		)	(5,038		)	—			(19,003		)
Net income	24,015			39,914			9,849			(46,441		)	27,337
Net income attributed to non-controlling interest	—			—			(3,322		)	—			(3,322		)
Net income attributed to Vector Group Ltd.	$	24,015		$	39,914		$	6,527		$	(46,441	)	$	24,015
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(3,322	)	$	—		$	(3,322	)
Comprehensive income attributed to Vector Group Ltd.	$	23,746		$	39,793		$	6,527		$	(46,320	)	$	23,746

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,291		$	161,022		$	(140	)	$	416,173
Expenses:
Cost of sales	—			175,334			103,870			—			279,204
Operating, selling, administrative and general expenses	7,174			22,555			50,327			(140		)	79,916
Litigation settlement and judgment expense	—			1,250			—			—			1,250
Management fee expense	—			2,563			—			(2,563		)	—
Operating (loss) income	(7,174		)	53,589			6,825			2,563			55,803
Other income (expenses):
Interest expense	(30,880		)	(879		)	(2		)	—			(31,761		)
Change in fair value of derivatives embedded within convertible debt	5,256			—			—			—			5,256
Equity in earnings from real estate ventures	—			—			1,856			—			1,856
Equity in loss from investments	(2,147		)	(16		)	—			—			(2,163		)
Loss on sale of investment securities available for sale	(190		)	—			—			—			(190		)
Equity in earnings in consolidated subsidiaries	35,745			—			—			(35,745		)	—
Management fee income	2,563			—			—			(2,563		)	—
Other, net	1,192			200			429			—			1,821
Income before provision for income taxes	4,365			52,894			9,108			(35,745		)	30,622
Income tax benefit (expense)	13,242			(21,219		)	(3,201		)	—			(11,178		)
Net income	17,607			31,675			5,907			(35,745		)	19,444
Net income attributed to non-controlling interest	—			—			(1,837		)	—			(1,837		)
Net income attributed to Vector Group Ltd.	$	17,607		$	31,675		$	4,070		$	(35,745	)	$	17,607
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(1,837	)	$	—		$	(1,837	)
Comprehensive income attributed to Vector Group Ltd.	$	17,834		$	31,131		$	4,070		$	(35,201	)	$	17,834

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	476,790		$	342,512		$	(229	)	$	819,073
Expenses:
Cost of sales	—			305,358			214,695			—			520,053
Operating, selling, administrative and general expenses	18,215			37,216			108,548			(229		)	163,750
Litigation settlement and judgment expense	—			2,350			—			—			2,350
Management fee expense	—			5,325			—			(5,325		)	—
Restructuring charges	—			41			—			—			41
Operating (loss) income	(18,215		)	126,500			19,269			5,325			132,879
Other income (expenses):
Interest expense	(65,280		)	(1,802		)	(7		)	—			(67,089		)
Change in fair value of derivatives embedded within convertible debt	17,110			—			—			—			17,110
Equity in earnings from real estate ventures	—			—			2,306			—			2,306
Equity in losses from investments	(558		)	(24		)	—			—			(582		)
Gain on sale of investment securities available for sale	315			391			—			—			706
Impairment of investment securities available for sale	(90		)	(4,772		)	—			—			(4,862		)
Equity in earnings in consolidated subsidiaries	82,051			—			—			(82,051		)	—
Management fee income	5,325			—			—			(5,325		)	—
Other, net	307			481			840			—			1,628
Income before provision for income taxes	20,965			120,774			22,408			(82,051		)	82,096
Income tax benefit (expense)	22,388			(48,293		)	(7,461		)	—			(33,366		)
Net income	43,353			72,481			14,947			(82,051		)	48,730
Net income attributed to non-controlling interest	—			—			(5,377		)	—			(5,377		)
Net income attributed to Vector Group Ltd.	$	43,353		$	72,481		$	9,570		$	(82,051	)	$	43,353
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(5,377	)	$	—		$	(5,377	)
Comprehensive income attributed to Vector Group Ltd.	$	43,127		$	72,503		$	9,570		$	(82,073	)	$	43,127

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2015
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	483,914		$	293,278		$	(259	)	$	776,933
Expenses:
Cost of sales	—			332,994			188,228			—			521,222
Operating, selling, administrative and general expenses	14,368			43,892			96,096			(259		)	154,097
Litigation settlement and judgment expense	—			2,093			—			—			2,093
Management fee expense	—			5,125			—			(5,125		)	—
Operating (loss) income	(14,368		)	99,810			8,954			5,125			99,521
Other income (expenses):
Interest expense	(61,634		)	(1,870		)	(3		)	—			(63,507		)
Change in fair value of derivatives embedded within convertible debt	11,716			—			—			—			11,716
Equity in earnings from real estate ventures	—			—			2,194			—			2,194
(Loss) gain on sale of investment securities available for sale	(336		)	13,175			—			—			12,839
Equity in losses from investments	(1,543		)	(8		)	—			—			(1,551		)
Equity in earnings in consolidated subsidiaries	71,744			—			—			(71,744		)	—
Management fee income	5,125			—			—			(5,125		)	—
Other, net	2,257			520			981			—			3,758
Income before provision for income taxes	12,961			111,627			12,126			(71,744		)	64,970
Income tax benefit (expense)	25,867			(45,403		)	(4,509		)	—			(24,045		)
Net income	38,828			66,224			7,617			(71,744		)	40,925
Net income attributed to non-controlling interest	—			—			(2,097		)	—			(2,097		)
Net income attributed to Vector Group Ltd.	$	38,828		$	66,224		$	5,520		$	(71,744	)	$	38,828
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(2,097	)	$	—		$	(2,097	)
Comprehensive income attributed to Vector Group Ltd.	$	44,037		$	63,398		$	5,520		$	(68,918	)	$	44,037

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	73,915		$	75,513		$	28,437		$	(99,040	)	$	78,825
Cash flows from investing activities:
Sale of investment securities	62,312			4,721			—			—			67,033
Maturities of investment securities	343			—			—			—			343
Purchase of investment securities	(56,691		)	—			—			—			(56,691		)
Proceeds from sale or liquidation of long-term investments	1,000			—			—			—			1,000
Purchase of long-term investments	—			—			(50		)	—			(50		)
Investments in real estate ventures	—			—			(11,806		)	—			(11,806		)
Distributions from investments in real estate ventures	—			—			17,983			—			17,983
Increase in cash surrender value of life insurance policies	—			(393		)	—			—			(393		)
(Increase) decrease in restricted assets	(7		)	2,181			500			—			2,674
Investments in subsidiaries	(987		)	—			—			987			—
Proceeds from sale of fixed assets	—			4			1			—			5
Capital expenditures	(26		)	(3,716		)	(3,873		)	—			(7,615		)
Pay downs of investment securities	4,926			—			—			—			4,926
Investments in real estate, net	—			—			(81		)	—			(81		)
Net cash provided by investing activities	10,870			2,797			2,674			987			17,328
Cash flows from financing activities:
Proceeds from issuance of debt	243,225			—			57			—			243,282
Deferred financing costs	(6,600		)	—			—			—			(6,600		)
Repayments of debt	—			(2,863		)	(54		)	—			(2,917		)
Borrowings under revolver	—			89,695			—			—			89,695
Repayments on revolver	—			(80,223		)	—			—			(80,223		)
Capital contributions received	—			600			387			(987		)	—
Intercompany dividends paid	—			(65,648		)	(33,392		)	99,040			—
Dividends and distributions on common stock	(97,846		)	—			—			—			(97,846		)
Contributions from non-controlling interest	—			—			248			—			248
Distributions to non-controlling interest	—			—			(7,422		)	—			(7,422		)
Net cash provided by (used in) financing activities	138,779			(58,439		)	(40,176		)	98,053			138,217
Net increase (decrease) in cash and cash equivalents	223,564			19,871			(9,065		)	—			234,370
Cash and cash equivalents, beginning of period	111,470			12,375			116,523			—			240,368
Cash and cash equivalents, end of period	$	335,034		$	32,246		$	107,458		$	—		$	474,738

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	42,679		$	99,159		$	13,057		$	(71,010	)	$	83,885
Cash flows from investing activities:
Sale of investment securities	103,846			14,415			—			—			118,261
Maturities of investment securities	1,737			—			—			—			1,737
Purchase of investment securities	(112,119		)	(1,476		)	—			—			(113,595		)
Proceeds from sale or liquidation of long-term investments	1,106			—			148			—			1,254
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(34,857		)	—			(34,857		)
Investments in real estate, net	—			—			(12,502		)	—			(12,502		)
Increase in cash surrender value of life insurance policies	(717		)	(401		)	—			—			(1,118		)
Increase in restricted assets	(1,327		)	(6,607		)	—			—			(7,934		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Pay downs of investment securities	3,530			—			—			—			3,530
Proceeds from sale of fixed assets	—			3			—			—			3
Investments in subsidiaries	(42,808		)	—			—			42,808			—
Proceeds from sale of preferred securities	—			—			1,000						1,000
Capital expenditures	—			(2,350		)	(3,029		)	—			(5,379		)
Net cash (used in) provided by investing activities	(51,752		)	3,584			(53,650		)	42,808			(59,010		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			22			—			—			22
Deferred financing costs	—			(625		)	—			—			(625		)
Repayments of debt	—			(3,254		)	(120		)	—			(3,374		)
Borrowings under revolver	—			126,727			—			—			126,727
Repayments on revolver	—			(144,492		)	—			—			(144,492		)
Capital contributions received	—			2,250			40,558			(42,808		)	—
Intercompany dividends paid	—			(69,075		)	(1,935		)	71,010			—
Dividends and distributions on common stock	(92,778		)	—			—			—			(92,778		)
Proceeds from exercise of Vector options	1,219			—			—			—			1,219
Tax benefit of options exercised	384			—			—			—			384
Net cash (used in) provided by financing activities	(91,175		)	(88,447		)	38,503			28,202			(112,917		)
Net (decrease) increase in cash and cash equivalents	(100,248		)	14,296			(2,090		)	—			(88,042		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	111,503		$	24,020		$	102,800		$	—		$	238,323

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Jun. 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 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.

Basis of Accounting

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, 2015 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.

Adoption of Equity Method

Adoption of Equity Method. The Company adopted the equity method of accounting for its investments in Ladenburg Thalmann Financial Services Inc. (“LTS”) and Castle Brands Inc. (“Castle”) in 2015 because the Company determined that it had significant influence due to the evolution of the relationships with each company. In accordance with ASC 323-35-33, the Company has adjusted its condensed consolidated financial statements, retrospectively, on a step-by-step basis as if the equity method had been in effect since inception.

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 to the extent paid-in-capital is available. The Company’s stock dividends are recorded as stock splits and given retroactive effect to earnings per share for all periods presented.

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 (e.g. federal excise taxes). 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 brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commission expenses are recognized concurrently with related revenues. Property management fees and rental commissions earned are recorded as revenue when the related services are performed and the earnings process is complete.

Revenue Recognition, Tobacco and E-Cigarettes sales

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 (e.g. federal excise taxes). 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.

Revenue Recognition, Real estate sales

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 brokerage businesses are recorded as revenue on a gross basis upon the closing of a real estate transaction as evidenced when the escrow or similar account is closed, the transaction documents have been recorded and funds are distributed to all appropriate parties. Commission expenses are recognized concurrently with related revenues. Property management fees and rental commissions earned are recorded as revenue when the related services are performed and the earnings process is complete.

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 value of the embedded derivatives based principally on the results of a valuation model. A readily determinable fair value of the embedded derivatives is not available. 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. 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. At June 30, 2016, the range of estimated fair values of the Company's embedded derivatives was between $125,983 and $127,870. The Company recorded the fair value of its embedded derivatives at the approximate midpoint of the range at $126,932 as of June 30, 2016. At December 31, 2015, the range of estimated fair values of the Company's embedded derivatives was between $143,422 and $144,660. The Company recorded the fair value of its embedded derivatives at the midpoint of the range at $144,042 as of December 31, 2015. The estimated fair 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 investment in real estate ventures are subject to evaluation under ASU No. 2015-02, “Consolidation” (“ASU 2015-02”) which requires all legal entities to be evaluated as either a voting interest entity or a Variable Interest Entities (“VIE”). The guidance is effective for financial statements of public companies issued for fiscal years beginning after December 15, 2015. The Company has followed the decision tree set forth in ASC 810-10-05-6 in analyzing each of its investments in real estate ventures. The Company examines specific criteria and uses judgment when determining if the real estate venture is a VIE and then if the Company is the primary beneficiary of a VIE. Factors considered in the qualification of a VIE include sufficient equity investment at risk, disproportionate voting rights and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights, and characteristics of a controlling financial interest.

Accounting guidance requires the Company to perform the VIE primary-beneficiary assessment for entities determined to be VIEs. The Company is required to consolidate all VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that a reporting entity 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 affect the VIE's economic performance and (b) the obligation to absorb losses or the right to receive residual returns of 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

Revisions to December 31, 2015 Consolidated Balance Sheet. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest” (“ASU 2015-03”), which requires debt issuance costs to be reported in the balance sheet as a direct deduction from the face amount of the note. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015. This amendment must be applied retrospectively to all periods presented. The Company adopted the provisions of this ASU retrospectively in the first quarter of 2016, and adjusted all prior periods accordingly. The adoption of this ASU will simplify the presentation of debt issuance costs and reduce complexity without decreasing the usefulness of information provided to users of financial statements. 

New Accounting Pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies U.S. Generally Accepted Accounting Principles (“GAAP”) by requiring the following, among others: (1) all excess tax benefits and tax deficiencies are to be recognized as income tax expense or benefit on the income statement (excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period); (2) excess tax benefits are to be classified along with other income tax cash flows as an operating activity in the statement of cash flows; (3) in the area of forfeitures, an entity can still follow the current U.S. GAAP practice of making an entity-wide accounting policy election to estimate the number of awards that are expected to vest or may instead account for forfeitures when they occur; and (4) classification as a financing activity in the statement of cash flows of cash paid by an employer to the taxing authorities when directly withholding shares for tax withholding purposes. ASU 2016-09 is effective for the Company's fiscal year beginning January 1, 2017, including interim periods. Early application is permitted. The Company is currently assessing the impact the adoption of ASU 2016-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 does not change the core principle of the guidance stated in ASU 2014-09, instead, the amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. ASU 2016-08 will have the same effective date and transition requirements as the new revenue standard issued in ASU 2014-09. The Company is currently evaluating the method and impact the adoption of this ASU and ASU 2014-09 will have on the Company's condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 will be effective for the Company’s fiscal year beginning January 1, 2017 and subsequent interim periods. The adoption of ASU 2016-07 is not expected to have a material effect on the Company’s condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force) (“ASU 2016-06”). ASU 2016-06 clarifies the requirement for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under ASU 2016-06 is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. The amendments in ASU 2016-06 are effective for the Company's fiscal year beginning January 1, 2017, including interim periods. The Company is currently evaluating the method and impact the adoption of this ASU 2016-06 will have on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current U.S. GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning January 1, 2019 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Company's condensed consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such these investments may be measured at cost. ASU 2016-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on the Company’s condensed 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, 2017, 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 the Company's condensed consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Jun. 30, 2015

Accounting Policies [Abstract]

Schedule of impacts of application of new ASU

The cumulative impacts of the application of the new ASU are presented in the table below:

	December 31, 2015
	As Previously Reported			ASU Adoption			As Revised
Other assets	$	51,261		$	(30,141	)	$	21,120
Total assets	$	1,310,756		$	(30,141	)	$	1,280,615
Notes payable, long-term debt and other obligations, less current portion	$	886,249		$	(30,141	)	$	856,108
Total liabilities	1,432,917			(30,141		)	1,402,776
Total stockholders' deficiency	(122,161		)	—			(122,161		)
Total liabilities and stockholders' deficiency	$	1,310,756		$	(30,141	)	$	1,280,615

The cumulative impact of the retrospective application of the equity method of accounting for the two investments are presented in the table below:

	Three Months Ended									Six Months Ended
	June 30, 2015									June 30, 2015
	As Previously Reported			Revision			As Revised			As Previously Reported			Revision			As Revised
Operating, selling, administrative and general expenses	$	79,679		$	237		$	79,916		$	153,623		$	474		$	154,097
Operating income	56,040			(237		)	55,803			99,995			(474		)	99,521
Equity in losses from investments	(1,657		)	(506		)	(2,163		)	(1,694		)	143			(1,551		)
Other, net	1,525			296			1,821			3,421			337			3,758
Income before provision for income taxes	31,069			(447		)	30,622			64,964			6			64,970
Income tax expense	11,364			(186		)	11,178			24,043			2			24,045
Net income	19,705			(261		)	19,444			40,921			4			40,925
Net income attributed to Vector Group Ltd.	17,868			(261		)	17,607			38,824			4			38,828
Other comprehensive (loss) income, net of tax	(2,781		)	3,008			227			(782		)	5,991			5,209
Comprehensive income	16,924			2,747			19,671			40,139			5,995			46,134
Comprehensive income attributed to Vector Group Ltd.	$	15,087		$	2,747		$	17,834		$	38,042		$	5,995		$	44,037

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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income attributed to Vector Group Ltd.	$	24,015		$	17,607		$	43,353		$	38,828
Income attributed to participating securities	(784		)	(521		)	(1,417		)	(1,151		)
Net income available to common shares attributed to Vector Group Ltd.	$	23,231		$	17,086		$	41,936		$	37,677

Basic and diluted EPS calculation shares

Basic and diluted EPS were calculated using the following common shares:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Weighted-average shares for basic EPS	118,065,857	117,954,708	118,062,358	117,475,380
Plus incremental shares related to stock options and non-vested restricted stock	236,348	209,067	215,386	205,262
Weighted-average shares for diluted EPS	118,302,205	118,163,775	118,277,744	117,680,642

Outstanding shares not included in the computation of diluted EPS

The following were outstanding during the three and six months ended June 30, 2016 and 2015, but were not included in the computation of diluted EPS because the effect was anti-dilutive.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Weighted-average number of shares issuable upon   conversion of debt	24,895,477		24,895,477		24,895,477		25,334,835
Weighted-average conversion price	$	19.63	$	19.63	$	19.63	$	19.48

Schedule of other income (loss), net

Other income, net consisted of:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016			2015		2016			2015
Interest and dividend income	$	1,452		$	1,795	$	2,776		$	3,535
Gain on long-term investment	—			24		—			224
Impairment of long-term investments	(921		)	—		(1,203		)	—
Other income (expense)	50			2		55			(1		)
Other income, net	$	581		$	1,821	$	1,628		$	3,758

Schedule of other current liabilities

Other current liabilities consisted of:

	June 30, 2016		December 31, 2015
Accounts payable	$	10,265	$	19,639
Accrued promotional expenses	22,269		24,816
Accrued excise and payroll taxes payable, net	16,784		26,556
Accrued interest	35,028		28,147
Commissions payable	9,885		11,008
Accrued salary and benefits	18,179		22,774
Other current liabilities	27,978		21,277
Total other current liabilities	$	140,388	$	154,217

Schedule of goodwill and other intangible assets, net

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

	June 30, 2016		December 31, 2015
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	4,564		5,657
Total goodwill and other intangible assets, net	$	262,866	$	263,959

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories consist of:

	June 30, 2016			December 31, 2015
Leaf tobacco	$	49,537		$	49,856
Other raw materials	3,586			3,578
Work-in-process	606			789
Finished goods	67,219			61,493
E-Cigarettes	67			80
Inventories at current cost	121,015			115,796
LIFO adjustments	(28,280		)	(29,280		)
	$	92,735		$	86,516

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Investment Securities Available for Sale (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities

The components of investment securities available for sale at June 30, 2016 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	38,172	$	17,343	$	(206	)	$	55,309
Mutual funds invested in fixed income securities	20,307		211		—			20,518
Marketable debt securities	83,865		1,162		—			85,027
Total investment securities available for sale	$	142,344	$	18,716	$	(206	)	$	160,854

The components of investment securities available for sale at December 31, 2015 were as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable equity securities	$	47,502	$	19,833	$	(62	)	$	67,273
Mutual funds invested in fixed income securities	20,126		—		(15		)	20,111
Marketable debt securities	94,540		52		—			94,592
Total investment securities available for sale	$	162,168	$	19,885	$	(77	)	$	181,976

Schedule of Maturity Dates of Fixed Income Securities

The table below summarizes the maturity dates of marketable debt securities at June 30, 2016.

Investment Type:	Market Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	27,456	$	—	$	27,456	$	—
Corporate securities	35,660		2,271		33,389		—
U.S. mortgage-backed securities	7,343		—		49		7,294
Commercial mortgage-backed securities	3,675		—		—		3,675
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		7,985		—		—
Index-linked U.S. bonds	793		—		793		—
Total marketable debt securities by maturity dates	$	85,027	$	10,256	$	63,802	$	10,969

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
June 30, 2016
Marketable equity securities	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
	$	—	$	—		$	5,794	$	(206	)	$	5,794	$	(206	)
December 31, 2015
Marketable equity securities	$	5,938	$	(62	)	$	—	$	—		$	5,938	$	(62	)
Mutual funds invested in fixed income securities	10,053		(15		)	—		—			10,053		(15		)
	$	15,991	$	(77	)	$	—	$	—		$	15,991	$	(77	)

Schedule of Realized Gains (Losses)

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Gross realized gains on sales	$	206		$	520		$	955		$	14,084
Gross realized losses on sales	(67		)	(710		)	(249		)	(1,245		)
Gains (losses) on sale of investment securities available for sale	$	139		$	(190	)	$	706		$	12,839
Gross realized losses on other-than-temporary impairments	$	(49	)	$	—		$	(4,862	)	$	—

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Long-Term Investments (Tables)

6 Months Ended

Jun. 30, 2016

Long-term Investments [Abstract]

Cost method investments

Long-term investments consisted of the following:

	June 30, 2016		December 31, 2015
Investments accounted at cost	$	39,028	$	41,231
Investments accounted for under the equity method	20,341		21,495
	$	59,369	$	62,726

Long-term investments accounted for at cost consisted of the following:

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Investments partnerships	$	38,527	$	41,522	$	40,730	$	44,217
Real estate partnership	501		504		501		552
	$	39,028	$	42,026	$	41,231	$	44,769

Equity method investments

Long-term investments accounted for under the equity method consisted of the following:

	June 30, 2016		December 31, 2015
Indian Creek Investors LP	$	4,929	$	4,989
Boyar Value Fund	7,312		7,302
Ladenburg Thalmann Financial Services Inc.	8,100		9,204
Castle Brands, Inc.	—		—
	$	20,341	$	21,495

Long-term investments consisted of the following:

	June 30, 2016		December 31, 2015
Investments accounted at cost	$	39,028	$	41,231
Investments accounted for under the equity method	20,341		21,495
	$	59,369	$	62,726

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New Valley LLC (Tables)

6 Months Ended

Jun. 30, 2016

Real Estate [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:

	June 30, 2016		December 31, 2015
10 Madison Square Park (1107 Broadway)	$	9,188	$	11,391
The Marquand (11 East 68th Street)	9,333		13,900
11 Beach Street	13,702		13,209
20 Times Square (701 Seventh Avenue)	16,487		14,985
111 Murray Street	25,308		25,567
160 Leroy Street	4,511		3,952
215 Chrystie Street	5,729		5,592
The Dutch (25-19 43rd Avenue)	1,129		1,077
Queens Plaza (23-10 Queens Plaza South)	16,834		16,177
87 Park (8701 Collins Avenue)	8,846		8,658
125 Greenwich Street	9,780		9,750
West Hollywood Edition (9040 Sunset Boulevard)	7,050		10,510
76 Eleventh Avenue	18,867		17,967
Monad Terrace	7,774		6,608
Takanasee	4,916		4,680
Condominium and Mixed Use Development	159,454		164,023
Maryland Portfolio	—		—
ST Portfolio	9,193		15,754
Apartment Buildings	9,193		15,754
Park Lane Hotel	21,138		19,697
Hotel Taiwana	7,786		7,069
Coral Beach and Tennis Club	3,162		3,159
Hotels	32,086		29,925
The Plaza at Harmon Meadow	3,682		5,449
Commercial	3,682		5,449
Other	1,724		2,017
Investments in real estate ventures	$	206,139	$	217,168

Schedule of real estate held for sale, net

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

	June 30, 2016		December 31, 2015
Escena, net	$	10,644	$	10,716
Sagaponack	12,684		12,602
Investments in real estate, net	$	23,328	$	23,318

Investment in Escena

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

	June 30, 2016			December 31, 2015
Land and land improvements	$	8,907		$	8,907
Building and building improvements	1,874			1,875
Other	2,001			1,923
	12,782			12,705
Less accumulated depreciation	(2,138		)	(1,989		)
	$	10,644		$	10,716

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

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Notes payable, long-term debt and other obligations

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

	June 30, 2016			December 31, 2015
Vector:
7.75% Senior Secured Notes due 2021, including premium of $15,391 and $8,014	$	850,391		$	608,014
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $121,788 and $132,119*	108,212			97,881
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $79,010 and $86,136*	179,740			172,614
Liggett:
Revolving credit facility	12,808			3,213
Term loan under credit facility	3,147			3,269
Equipment loans	6,866			9,716
Other	354			461
Notes payable, long-term debt and other obligations	1,161,518			895,168
Less:
Debt issuance costs	(34,172		)	(30,141		)
Total notes payable, long-term debt and other obligations	1,127,346			865,027
Less:
Current maturities	(16,615		)	(8,919		)
Amount due after one year	$	1,110,731		$	856,108

______________________

* The fair value of the derivatives embedded within the 7.5% Variable Interest Senior Convertible Notes ($61,998 at June 30, 2016 and $72,083 at December 31, 2015, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($64,934 at June 30, 2016 and $71,959 at December 31, 2015, 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 June 30, 2016 and December 31, 2015, are summarized below:

	June 30, 2016			December 31, 2015
	Conversion Price		Shares per $1,000	Conversion Price		Shares per $1,000
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				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Amortization of debt discount, net	$	8,653	$	6,213	$	16,609	$	11,840
Amortization of debt issuance costs	1,401		1,022		2,569		1,988
	$	10,054	$	7,235	$	19,178	$	13,828

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

Fair Value of Notes Payable and Long-Term Debt:

	June 30, 2016					December 31, 2015
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	1,161,518	(1)	$	1,513,012	$	895,168	(1)	$	1,297,875

______________________

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

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Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of contingencies

The activity in the Company's accruals for the MSA and tobacco litigation for the six months ended June 30, 2016 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, 2016	$	29,241		$	22,904		$	52,145		$	20,094	$	24,718		$	44,812
Expenses	42,637			2,583			45,220			—		—			—
Change in MSA obligations capitalized as inventory	69			—			69			—		—			—
Payments	(12,847		)	(25,545		)	(38,392		)	—		—			—
Reclassification to/(from) non-current liabilities	(2,163		)	3,252			1,089			2,163		(3,252		)	(1,089		)
Interest on withholding	35			320			355			—		1,153			1,153
Balance as of June 30, 2016	$	56,972		$	3,514		$	60,486		$	22,257	$	22,619		$	44,876

The activity in the Company's accruals for the MSA and tobacco litigation for the six months ended June 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	53,435			2,490			55,925			—		(195		)	(195		)
Change in MSA obligations capitalized as inventory	1,011			—			1,011			—		—			—
Payments	(18,142		)	(5,645		)	(23,787		)	—		—			—
Reclassification from non-current liabilities	—			3,305			3,305			—		(3,305		)	(3,305		)
Interest on withholding	—			178			178			—		1,244			1,244
Balance as of June 30, 2015	$	62,626		$	3,477		$	66,103		$	25,809	$	23,444		$	49,253

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

State	Number of Cases
Maryland	13
Florida	11
New York	7
Louisiana	3
West Virginia	2
Missouri	1
Ohio	1

As of June 30, 2016, 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. Both sides sought discretionary review from the Florida Supreme Court. In February 2016, the Florida Supreme Court reinstated the jury's verdict. The defendants moved for clarification of that order, which was granted in March 2016. The court clarified that it reversed the district court's decision regarding the statute of repose only, leaving the remaining portions of the decision intact. The case will be remanded to the trial court for proceedings consistent with those portions of the district court's decision that were not reversed.
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 merits judgment. Subsequently, the trial court entered a joint and several final judgment on attorneys' fees and costs for $981 and defendants appealed that judgment.
May 2012	Calloway v. R.J. Reynolds	Broward	1,530	—	A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. On January 6, 2016, the Fourth District Court of Appeal reversed in part, including the $7,600 punitive damages award against Liggett, and remanded the case to the trial court for a new trial on certain issues. Both sides have moved for rehearing.
December 2012	Buchanan v. R.J. Reynolds	Leon	2,750	—	Liggett satisfied the judgment and the case is concluded.
May 2013	Cohen v. R.J. Reynolds	Palm Beach	—	—	In May 2013, the jury awarded compensatory damages in the amount of $2,055 and apportioned 10% of the fault to Liggett ($205). Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed and defendants cross-appealed. Oral argument occurred on June 7, 2016. A decision is pending.
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	—	—	In August 2014, the jury awarded compensatory damages in the amount of $3,123 and apportioned 1% of the fault to Liggett ($31). In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed.
October 2014	Lambert v. R.J. Reynolds	Pinellas	3,600	9,500	Liggett satisfied the judgment and the case is concluded.
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. Defendants appealed and plaintiff cross-appealed.
June 2015	Caprio v. R.J. Reynolds	Broward	—	—	In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others.  The jury returned a verdict of $559 in economic damages. The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages.  Defendants appealed.
Total Damages Awarded:			28,866	10,800
Amounts accrued, paid or compromised:			(24,328)	(10,500)
Damages remaining on Appeal:			$4,538	$300
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault and only include Liggett's jury allocated share, regardless of whether a judgment was joint and several. 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.

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

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						Pension Benefits						Other Postretirement Benefits						Other Postretirement Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015
Service cost — benefits earned during the period	$	137		$	133		$	274		$	265		$	1		$	2		$	2		$	4
Interest cost on projected benefit obligation	1,355			1,280			2,710			2,598			97			93			194			185
Expected return on assets	(1,519		)	(1,888		)	(3,038		)	(3,813		)	—			—			—			—
Settlement loss	—			1,607			—			1,607			—			—			—			—
Amortization of net loss (gain)	464			278			928			569			(19		)	(24		)	(38		)	(48		)
Net expense	$	437		$	1,410		$	874		$	1,226		$	79		$	71		$	158		$	141

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2016

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following table presents the activity under the Tobacco segment restructuring plan for the six months ended June 30, 2016:

	Employee Severance and Benefits			Contract Termination/Exit Costs			Other			Total
Accrual balance as of January 1, 2016	$	422		$	48		$	20		$	490
Restructuring charges	—			41			—			41
Utilized	(315		)	(89		)	(20		)	(424		)
Accrual balance as of June 30, 2016	$	107		$	—		$	—		$	107

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income tax expense (benefit)

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
Income before provision for income taxes	$	46,340	$	30,622		$	82,096	$	64,970
Income tax expense using estimated annual effective income tax rate	18,793		11,347			33,317		24,145
Changes in effective tax rates	210		(78		)	—		—
Impact of discrete items, net	—		(91		)	49		(100		)
Income tax expense	$	19,003	$	11,178		$	33,366	$	24,045

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Investments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

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 were as follows:

	Fair Value Measurements as of June 30, 2016
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	336,845	$	336,845	$	—	$	—
Commercial paper	42,044		—		42,044		—
Certificates of deposit	2,976		—		2,976		—
Bonds	10,767		10,767		—		—
Investment securities available for sale
Equity securities	55,309		55,309		—		—
Mutual funds invested in fixed income securities	20,518		20,518		—		—
Fixed income securities
U.S. government securities	27,456		—		27,456		—
Corporate securities	35,660		—		35,660		—
U.S. government and federal agency	7,343		—		7,343		—
Commercial mortgage-backed securities	3,675		—		3,675		—
U.S. asset-backed securities	2,115		—		2,115		—
Commercial paper	7,985		—		7,985		—
Index-linked U.S. bonds	793		—		793		—
Total fixed income securities	85,027		—		85,027		—
Total investment securities available for sale	160,854		75,827		85,027		—
Total	$	553,486	$	423,439	$	130,047	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	126,932	$	—	$	—	$	126,932
Nonrecurring fair value measurements
Long-term investments (1)	$	6,396					$	6,396	$	(1,203	)

(1) Long-term investments with a carrying amount of $7,599 were written down to their fair value of $6,396, resulting in an impairment charge of $1,203, which was included in earnings.

	Fair Value Measurements as of December 31, 2015
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds	$	93,915	$	93,915	$	—	$	—
Certificates of deposit	3,469		—		3,469		—
Bonds	12,767		12,767		—		—
Investment securities available for sale
Equity securities	67,273		67,273		—		—
Mutual funds invested in fixed income securities	20,111		20,111		—		—
Fixed income securities
U.S. government securities	28,132		—		28,132		—
Corporate securities	41,561		—		41,561		—
U.S. government and federal agency	5,790		—		5,790		—
Commercial mortgage-backed securities	8,728		—		8,728		—
U.S. asset-backed securities	8,276		—		8,276		—
Index-linked U.S. bonds	2,105		—		2,105		—
Total fixed income securities	94,592		—		94,592		—
Total investment securities available for sale	181,976		87,384		94,592		—
Total	$	292,127	$	194,066	$	98,061	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	144,042	$	—	$	—	$	144,042
Nonrecurring fair value measurements
Long-term investments (1)	$	11,189					$	11,189	$	(811	)
Investments in real estate, net (2)	3,780						3,780		(230		)
	$	14,969					$	14,969	$	(1,041	)

(1) Long-term investments with a carrying amount of $12,000 were written down to their fair value of $11,189, resulting in an impairment charge of $811, which was included in earnings.

(2) Investment in real estate, net with a carrying value of $4,010 was written down to its fair value of $3,780, resulting in an impairment charge of $230, which was included in earnings.

Unobservable inputs related to the valuations of the Level 3 assets

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at June 30, 2016:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2016		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	126,932	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.42
				Convertible trading price (as a percentage of par value)	110.88		%
				Volatility	19.33		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 7.0% (6.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	144,042	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	23.59
				Convertible trading price (as a percentage of par value)	114.31		%
				Volatility	18.30		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	5.0% - 5.5% (5.25%)

Unobservable inputs related to the valuations of the Level 3 liabilities

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at June 30, 2016:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	June 30, 2016		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	126,932	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.42
				Convertible trading price (as a percentage of par value)	110.88		%
				Volatility	19.33		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	6.0% - 7.0% (6.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2015:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2015		Valuation Technique	Unobservable Input	Range (Actual)
Fair value of derivatives embedded within convertible debt	$	144,042	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	23.59
				Convertible trading price (as a percentage of par value)	114.31		%
				Volatility	18.30		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	5.0% - 5.5% (5.25%)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Financial information for the company's operations before taxes

Financial information for the Company’s operations before taxes and non-controlling interests for the three and six months ended June 30, 2016 and 2015 were as follows:

							Real		Corporate
	Tobacco			E-Cigarettes			Estate		and Other			Total
Three months ended June 30, 2016
Revenues	$	255,498		$	10		$	182,765	$	—		$	438,273
Operating income (loss)	66,016			(91		)	11,706		(6,911		)	70,720
Equity in earnings from real estate ventures	—			—			2,813		—			2,813
Depreciation and amortization	2,499			—			2,943		428			5,870
Three months ended June 30, 2015
Revenues	$	254,890		$	261		$	161,022	$	—		$	416,173
Operating income (loss)	56,215		(1)	(2,400		)	6,892		(4,904		)	55,803
Equity in earnings from real estate ventures	—			—			1,856		—			1,856
Depreciation and amortization	2,931			—			3,076		435			6,442
Six months ended June 30, 2016
Revenues	$	476,513		$	48		$	342,512	$	—		$	819,073
Operating income (loss)	127,499		(2)	(284		)	19,380		(13,716		)	132,879
Equity in earnings from real estate ventures	—			—			2,306		—			2,306
Depreciation and amortization	4,939			—			5,225		870			11,034
Capital expenditures	3,716			—			3,873		26			7,615
Six months ended June 30, 2015
Revenues	$	482,975		$	680		$	293,278	$	—		$	776,933
Operating income (loss)	105,885		(3)	(5,564		)	9,043		(9,843		)	99,521
Equity in earnings from real estate ventures	—			—			2,194		—			2,194
Depreciation and amortization	5,867			—			5,984		872			12,723
Capital expenditures	2,350			—			3,029		—			5,379

⁽¹⁾  Operating income includes $1,250 of litigation settlement expense and $1,607 of pension settlement expense.

⁽²⁾  Operating income includes $2,350 of litigation settlement expense, and $41 of restructuring expense.

⁽³⁾  Operating income includes $2,093 of litigation settlement expense and $1,607 of pension settlement expense.

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Condensed Consolidating Financial Information (Tables)

6 Months Ended

Jun. 30, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheets

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2016
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	335,034		$	32,246	$	107,458	$	—		$	474,738
Investment securities available for sale	120,283			40,571		—		—			160,854
Accounts receivable - trade, net	—			15,015		10,061		—			25,076
Intercompany receivables	16,435			—		—		(16,435		)	—
Inventories	—			92,735		—		—			92,735
Income taxes receivable, net	12,342			—		—		(12,124		)	218
Restricted assets	—			8,523		914		—			9,437
Other current assets	618			3,794		35,751		—			40,163
Total current assets	484,712			192,884		154,184		(28,559		)	803,221
Property, plant and equipment, net	1,452			51,122		19,330		—			71,904
Investments in real estate, net	—			—		23,328		—			23,328
Long-term investments	58,414			454		501		—			59,369
Investments in real estate ventures	—			—		206,139		—			206,139
Investments in consolidated subsidiaries	517,365			—		—		(517,365		)	—
Restricted assets	1,720			7,666		—		—			9,386
Goodwill and other intangible assets, net	—			107,511		155,355		—			262,866
Prepaid pension costs	—			21,302		—		—			21,302
Other assets	7,621			12,002		2,362		—			21,985
Total assets	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	16,523	$	92	$	—		$	16,615
Current portion of employee benefits	—			914		—		—			914
Intercompany payables	—			585		15,850		(16,435		)	—
Income taxes payable, net	—			11,501		623		(12,124		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			60,486		—		—			60,486
Other current liabilities	44,520			55,350		40,518		—			140,388
Total current liabilities	44,520			145,359		57,083		(28,559		)	218,403
Notes payable, long-term debt and other obligations, less current portion	1,104,171			6,338		222		—			1,110,731
Fair value of derivatives embedded within convertible debt	126,932			—		—		—			126,932
Non-current employee benefits	40,075			15,233		—		—			55,308
Deferred income taxes, net	7,826			35,138		44,950		—			87,914
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	5,285			45,010		5,353		—			55,648
Total liabilities	1,328,809			247,078		107,608		(28,559		)	1,654,936
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(257,525		)	145,863		371,502		(517,365		)	(257,525		)
Non-controlling interest	—			—		82,089		—			82,089
Total stockholders' (deficiency) equity	(257,525		)	145,863		453,591		(517,365		)	(175,436		)
Total liabilities and stockholders' deficiency	$	1,071,284		$	392,941	$	561,199	$	(545,924	)	$	1,479,500

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
Investments in real estate, 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	7,582			11,769		1,769		—			21,120
Total assets	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615
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	848,368			7,519		221		—			856,108
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	1,074,662			244,029		100,750		(16,665		)	1,402,776
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	$	868,615		$	381,593	$	579,573	$	(549,166	)	$	1,280,615

Condensed Consolidating Statements of Operations

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,648		$	182,765		$	(140	)	$	438,273
Expenses:
Cost of sales	—			168,614			115,017			—			283,631
Operating, selling, administrative and general expenses	9,019			18,943			56,100			(140		)	83,922
Management fee expense	—			2,663			—			(2,663		)	—
Operating (loss) income	(9,019		)	65,428			11,648			2,663			70,720
Other income (expenses):
Interest expense	(35,522		)	(843		)	(4		)	—			(36,369		)
Change in fair value of derivatives embedded within convertible debt	7,416			—			—			—			7,416
Equity in earnings from real estate ventures	—			—			2,813			—			2,813
Equity in earnings (loss) from investments	1,097			(8		)	—			—			1,089
Gain on sale of investment securities available for sale	139			—			—			—			139
Impairment of investment securities available for sale	(49		)	—			—			—			(49		)
Equity in earnings in consolidated subsidiaries	46,441			—			—			(46,441		)	—
Management fee income	2,663			—			—			(2,663		)	—
Other, net	(93		)	244			430			—			581
Income before provision for income taxes	13,073			64,821			14,887			(46,441		)	46,340
Income tax benefit (expense)	10,942			(24,907		)	(5,038		)	—			(19,003		)
Net income	24,015			39,914			9,849			(46,441		)	27,337
Net income attributed to non-controlling interest	—			—			(3,322		)	—			(3,322		)
Net income attributed to Vector Group Ltd.	$	24,015		$	39,914		$	6,527		$	(46,441	)	$	24,015
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(3,322	)	$	—		$	(3,322	)
Comprehensive income attributed to Vector Group Ltd.	$	23,746		$	39,793		$	6,527		$	(46,320	)	$	23,746

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	255,291		$	161,022		$	(140	)	$	416,173
Expenses:
Cost of sales	—			175,334			103,870			—			279,204
Operating, selling, administrative and general expenses	7,174			22,555			50,327			(140		)	79,916
Litigation settlement and judgment expense	—			1,250			—			—			1,250
Management fee expense	—			2,563			—			(2,563		)	—
Operating (loss) income	(7,174		)	53,589			6,825			2,563			55,803
Other income (expenses):
Interest expense	(30,880		)	(879		)	(2		)	—			(31,761		)
Change in fair value of derivatives embedded within convertible debt	5,256			—			—			—			5,256
Equity in earnings from real estate ventures	—			—			1,856			—			1,856
Equity in loss from investments	(2,147		)	(16		)	—			—			(2,163		)
Loss on sale of investment securities available for sale	(190		)	—			—			—			(190		)
Equity in earnings in consolidated subsidiaries	35,745			—			—			(35,745		)	—
Management fee income	2,563			—			—			(2,563		)	—
Other, net	1,192			200			429			—			1,821
Income before provision for income taxes	4,365			52,894			9,108			(35,745		)	30,622
Income tax benefit (expense)	13,242			(21,219		)	(3,201		)	—			(11,178		)
Net income	17,607			31,675			5,907			(35,745		)	19,444
Net income attributed to non-controlling interest	—			—			(1,837		)	—			(1,837		)
Net income attributed to Vector Group Ltd.	$	17,607		$	31,675		$	4,070		$	(35,745	)	$	17,607
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(1,837	)	$	—		$	(1,837	)
Comprehensive income attributed to Vector Group Ltd.	$	17,834		$	31,131		$	4,070		$	(35,201	)	$	17,834

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	476,790		$	342,512		$	(229	)	$	819,073
Expenses:
Cost of sales	—			305,358			214,695			—			520,053
Operating, selling, administrative and general expenses	18,215			37,216			108,548			(229		)	163,750
Litigation settlement and judgment expense	—			2,350			—			—			2,350
Management fee expense	—			5,325			—			(5,325		)	—
Restructuring charges	—			41			—			—			41
Operating (loss) income	(18,215		)	126,500			19,269			5,325			132,879
Other income (expenses):
Interest expense	(65,280		)	(1,802		)	(7		)	—			(67,089		)
Change in fair value of derivatives embedded within convertible debt	17,110			—			—			—			17,110
Equity in earnings from real estate ventures	—			—			2,306			—			2,306
Equity in losses from investments	(558		)	(24		)	—			—			(582		)
Gain on sale of investment securities available for sale	315			391			—			—			706
Impairment of investment securities available for sale	(90		)	(4,772		)	—			—			(4,862		)
Equity in earnings in consolidated subsidiaries	82,051			—			—			(82,051		)	—
Management fee income	5,325			—			—			(5,325		)	—
Other, net	307			481			840			—			1,628
Income before provision for income taxes	20,965			120,774			22,408			(82,051		)	82,096
Income tax benefit (expense)	22,388			(48,293		)	(7,461		)	—			(33,366		)
Net income	43,353			72,481			14,947			(82,051		)	48,730
Net income attributed to non-controlling interest	—			—			(5,377		)	—			(5,377		)
Net income attributed to Vector Group Ltd.	$	43,353		$	72,481		$	9,570		$	(82,051	)	$	43,353
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(5,377	)	$	—		$	(5,377	)
Comprehensive income attributed to Vector Group Ltd.	$	43,127		$	72,503		$	9,570		$	(82,073	)	$	43,127

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2015
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	483,914		$	293,278		$	(259	)	$	776,933
Expenses:
Cost of sales	—			332,994			188,228			—			521,222
Operating, selling, administrative and general expenses	14,368			43,892			96,096			(259		)	154,097
Litigation settlement and judgment expense	—			2,093			—			—			2,093
Management fee expense	—			5,125			—			(5,125		)	—
Operating (loss) income	(14,368		)	99,810			8,954			5,125			99,521
Other income (expenses):
Interest expense	(61,634		)	(1,870		)	(3		)	—			(63,507		)
Change in fair value of derivatives embedded within convertible debt	11,716			—			—			—			11,716
Equity in earnings from real estate ventures	—			—			2,194			—			2,194
(Loss) gain on sale of investment securities available for sale	(336		)	13,175			—			—			12,839
Equity in losses from investments	(1,543		)	(8		)	—			—			(1,551		)
Equity in earnings in consolidated subsidiaries	71,744			—			—			(71,744		)	—
Management fee income	5,125			—			—			(5,125		)	—
Other, net	2,257			520			981			—			3,758
Income before provision for income taxes	12,961			111,627			12,126			(71,744		)	64,970
Income tax benefit (expense)	25,867			(45,403		)	(4,509		)	—			(24,045		)
Net income	38,828			66,224			7,617			(71,744		)	40,925
Net income attributed to non-controlling interest	—			—			(2,097		)	—			(2,097		)
Net income attributed to Vector Group Ltd.	$	38,828		$	66,224		$	5,520		$	(71,744	)	$	38,828
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(2,097	)	$	—		$	(2,097	)
Comprehensive income attributed to Vector Group Ltd.	$	44,037		$	63,398		$	5,520		$	(68,918	)	$	44,037

Condensed Consolidating Statements of Cash Flows

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	73,915		$	75,513		$	28,437		$	(99,040	)	$	78,825
Cash flows from investing activities:
Sale of investment securities	62,312			4,721			—			—			67,033
Maturities of investment securities	343			—			—			—			343
Purchase of investment securities	(56,691		)	—			—			—			(56,691		)
Proceeds from sale or liquidation of long-term investments	1,000			—			—			—			1,000
Purchase of long-term investments	—			—			(50		)	—			(50		)
Investments in real estate ventures	—			—			(11,806		)	—			(11,806		)
Distributions from investments in real estate ventures	—			—			17,983			—			17,983
Increase in cash surrender value of life insurance policies	—			(393		)	—			—			(393		)
(Increase) decrease in restricted assets	(7		)	2,181			500			—			2,674
Investments in subsidiaries	(987		)	—			—			987			—
Proceeds from sale of fixed assets	—			4			1			—			5
Capital expenditures	(26		)	(3,716		)	(3,873		)	—			(7,615		)
Pay downs of investment securities	4,926			—			—			—			4,926
Investments in real estate, net	—			—			(81		)	—			(81		)
Net cash provided by investing activities	10,870			2,797			2,674			987			17,328
Cash flows from financing activities:
Proceeds from issuance of debt	243,225			—			57			—			243,282
Deferred financing costs	(6,600		)	—			—			—			(6,600		)
Repayments of debt	—			(2,863		)	(54		)	—			(2,917		)
Borrowings under revolver	—			89,695			—			—			89,695
Repayments on revolver	—			(80,223		)	—			—			(80,223		)
Capital contributions received	—			600			387			(987		)	—
Intercompany dividends paid	—			(65,648		)	(33,392		)	99,040			—
Dividends and distributions on common stock	(97,846		)	—			—			—			(97,846		)
Contributions from non-controlling interest	—			—			248			—			248
Distributions to non-controlling interest	—			—			(7,422		)	—			(7,422		)
Net cash provided by (used in) financing activities	138,779			(58,439		)	(40,176		)	98,053			138,217
Net increase (decrease) in cash and cash equivalents	223,564			19,871			(9,065		)	—			234,370
Cash and cash equivalents, beginning of period	111,470			12,375			116,523			—			240,368
Cash and cash equivalents, end of period	$	335,034		$	32,246		$	107,458		$	—		$	474,738

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	42,679		$	99,159		$	13,057		$	(71,010	)	$	83,885
Cash flows from investing activities:
Sale of investment securities	103,846			14,415			—			—			118,261
Maturities of investment securities	1,737			—			—			—			1,737
Purchase of investment securities	(112,119		)	(1,476		)	—			—			(113,595		)
Proceeds from sale or liquidation of long-term investments	1,106			—			148			—			1,254
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in real estate ventures	—			—			(34,857		)	—			(34,857		)
Investments in real estate, net	—			—			(12,502		)	—			(12,502		)
Increase in cash surrender value of life insurance policies	(717		)	(401		)	—			—			(1,118		)
Increase in restricted assets	(1,327		)	(6,607		)	—			—			(7,934		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Pay downs of investment securities	3,530			—			—			—			3,530
Proceeds from sale of fixed assets	—			3			—			—			3
Investments in subsidiaries	(42,808		)	—			—			42,808			—
Proceeds from sale of preferred securities	—			—			1,000						1,000
Capital expenditures	—			(2,350		)	(3,029		)	—			(5,379		)
Net cash (used in) provided by investing activities	(51,752		)	3,584			(53,650		)	42,808			(59,010		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			22			—			—			22
Deferred financing costs	—			(625		)	—			—			(625		)
Repayments of debt	—			(3,254		)	(120		)	—			(3,374		)
Borrowings under revolver	—			126,727			—			—			126,727
Repayments on revolver	—			(144,492		)	—			—			(144,492		)
Capital contributions received	—			2,250			40,558			(42,808		)	—
Intercompany dividends paid	—			(69,075		)	(1,935		)	71,010			—
Dividends and distributions on common stock	(92,778		)	—			—			—			(92,778		)
Proceeds from exercise of Vector options	1,219			—			—			—			1,219
Tax benefit of options exercised	384			—			—			—			384
Net cash (used in) provided by financing activities	(91,175		)	(88,447		)	38,503			28,202			(112,917		)
Net (decrease) increase in cash and cash equivalents	(100,248		)	14,296			(2,090		)	—			(88,042		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	111,503		$	24,020		$	102,800		$	—		$	238,323

XML

Summary of Significant Accounting Policies (Schedule of prior period revisions) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other assets	$ 21,985		$ 21,985		$ 21,120
Total assets	1,479,500		1,479,500		1,280,615
Notes payable, long-term debt and other obligations, less current portion	1,110,731		1,110,731		856,108
Total liabilities	1,654,936		1,654,936		1,402,776
Total stockholders' equity	(175,436)		(175,436)		(122,161)
Total liabilities and stockholders' deficiency	1,479,500		1,479,500		1,280,615
Operating, selling, administrative and general expenses	83,922	$ 79,916	163,750	$ 154,097
Operating income (loss)	70,720	55,803	132,879	99,521
Equity in earnings (losses) from investments	1,089	(2,163)	(582)	(1,551)
Other, net	581	1,821	1,628	3,758
Income before provision for income taxes	46,340	30,622	82,096	64,970
Income tax expense	19,003	11,178	33,366	24,045
Net income	27,337	19,444	48,730	40,925
Net income attributed to Vector Group Ltd.	24,015	17,607	43,353	38,828
Other comprehensive (loss) income, net of tax	(269)	227	(226)	5,209
Comprehensive income	27,068	19,671	48,504	46,134
Comprehensive income attributed to Vector Group Ltd.	$ 23,746	17,834	$ 43,127	44,037
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other assets					51,261
Total assets					1,310,756
Notes payable, long-term debt and other obligations, less current portion					886,249
Total liabilities					1,432,917
Total stockholders' equity					(122,161)
Total liabilities and stockholders' deficiency					1,310,756
Operating, selling, administrative and general expenses		79,679		153,623
Operating income (loss)		56,040		99,995
Equity in earnings (losses) from investments		(1,657)		(1,694)
Other, net		1,525		3,421
Income before provision for income taxes		31,069		64,964
Income tax expense		11,364		24,043
Net income		19,705		40,921
Net income attributed to Vector Group Ltd.		17,868		38,824
Other comprehensive (loss) income, net of tax		(2,781)		(782)
Comprehensive income		16,924		40,139
Comprehensive income attributed to Vector Group Ltd.		15,087		38,042
Revision | Adoption of Equity Method
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating, selling, administrative and general expenses		237		474
Operating income (loss)		(237)		(474)
Equity in earnings (losses) from investments		(506)		143
Other, net		296		337
Income before provision for income taxes		(447)		6
Income tax expense		(186)		2
Net income		(261)		4
Net income attributed to Vector Group Ltd.		(261)		4
Other comprehensive (loss) income, net of tax		3,008		5,991
Comprehensive income		2,747		5,995
Comprehensive income attributed to Vector Group Ltd.		$ 2,747		$ 5,995
Revision | ASU 2015-03
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other assets					(30,141)
Total assets					(30,141)
Notes payable, long-term debt and other obligations, less current portion					(30,141)
Total liabilities					(30,141)
Total stockholders' equity					0
Total liabilities and stockholders' deficiency					$ (30,141)

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Sep. 29, 2015
Accounting Policies [Abstract]
Stock dividend paid to company stockholders			5.00%
Embedded Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	$ 126,932	$ 144,042
Minimum
Embedded Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	125,983	143,422
Maximum
Embedded Derivative [Line Items]
Fair market value of embedded derivatives at the midpoint of the inputs	$ 127,870	$ 144,660

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Summary of Significant Accounting Policies (Net Income (Loss) for Purposes of Determining Basic and Diluted EPS) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accounting Policies [Abstract]
Net income attributed to Vector Group Ltd.	$ 24,015	$ 17,607	$ 43,353	$ 38,828
Income attributed to participating securities	(784)	(521)	(1,417)	(1,151)
Income attributed to participating securities	(784)	(521)	(1,417)	(1,151)
Net income available to common shares attributed to Vector Group Ltd.	23,231	17,086	41,936	37,677
Net income available to common shares attributed to Vector Group Ltd.	$ 23,231	$ 17,086	$ 41,936	$ 37,677

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Summary of Significant Accounting Policies (Basic and Diluted Earnings Per Share (in shares)) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accounting Policies [Abstract]
Weighted-average shares for basic EPS	118,065,857	117,954,708	118,062,358	117,475,380
Plus incremental shares related to stock options and non-vested restricted stock	236,348	209,067	215,386	205,262
Weighted-average shares for diluted EPS	118,302,205	118,163,775	118,277,744	117,680,642

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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		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidiliitive securities excluded from computation (in shares)	24,895,477	24,895,477	24,895,477	25,334,835
Weighted-average conversion price (in dollars per share)	$ 19.63	$ 19.63	$ 19.63	$ 19.48

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Summary of Significant Accounting Policies (Schedule of Other Income, Net) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accounting Policies [Abstract]
Interest and dividend income	$ 1,452	$ 1,795	$ 2,776	$ 3,535
Gain on long-term investment	0	24	0	224
Impairment of long-term investments	(921)	0	(1,203)	0
Other income (expense)	50	2	55	(1)
Other income, net	$ 581	$ 1,821	$ 1,628	$ 3,758

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Summary of Significant Accounting Policies (Other Current Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Accounts payable	$ 10,265	$ 19,639
Accrued promotional expenses	22,269	24,816
Accrued excise and payroll taxes payable, net	16,784	26,556
Accrued interest	35,028	28,147
Commissions payable	9,885	11,008
Accrued salary and benefits	18,179	22,774
Other current liabilities	27,978	21,277
Total other current liabilities	$ 140,388	$ 154,217

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Summary of Significant Accounting Policies (Goodwill and Other Intangible Assets, net) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 70,791	$ 70,791
Intangibles with a finite life, net	4,564	5,657
Total goodwill and other intangible assets, net	262,866	263,959
Intangible asset associated with benefit under the MSA
Indefinite-lived Intangible Assets [Line Items]
Indefinite life intangibles:	107,511	107,511
Trademark - Douglas Elliman
Indefinite-lived Intangible Assets [Line Items]
Indefinite life intangibles:	$ 80,000	$ 80,000

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Summary of Significant Accounting Policies (Commitments) (Details) - Douglas Elliman - Lease Extension and Sublease Agreement $ in Thousands	Dec. 31, 2015 USD ($)
Operating Leased Assets [Line Items]
Possible increase in lease commitments 2016	$ 0
Possible increase in lease commitments 2017	1,164
Possible increase in lease commitments 2018	1,412
Possible increase in lease commitments 2019	3,733
Possible increase in lease commitments 2020	5,394
Possible increase in lease commitments, thereafter	$ 69,460

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Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Inventory [Line Items]
Leaf tobacco	$ 49,537	$ 49,856
Other raw materials	3,586	3,578
Work-in-process	606	789
Inventories at current cost	121,015	115,796
LIFO adjustments	(28,280)	(29,280)
Inventory, net	92,735	86,516
Cigarettes
Inventory [Line Items]
Finished goods	67,219	61,493
E-Cigarettes
Inventory [Line Items]
Finished goods	67	80
LIFO adjustments	$ (5)	$ (5)

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Inventories (Narrartive) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Inventory [Line Items]
LIFO adjustments	$ 28,280	$ 29,280
Capitalized MSA cost in finished goods inventory	15,865	15,796
Inventories
Inventory [Line Items]
Federal excise tax in inventory	26,417	23,455
Liggett | Inventories
Inventory [Line Items]
Purchase commitments	16,151
Leaf tobacco
Inventory [Line Items]
LIFO adjustments	18,863	19,863
Other raw materials
Inventory [Line Items]
LIFO adjustments	643	643
Work-in-process
Inventory [Line Items]
LIFO adjustments	33	33
Finished goods
Inventory [Line Items]
LIFO adjustments	8,736	8,736
E-Cigarettes
Inventory [Line Items]
LIFO adjustments	$ 5	$ 5

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Investment Securities Available for Sale (Components of Investment Securities Available for Sale) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 142,344	$ 162,168
Gross Unrealized Gains	18,716	19,885
Gross Unrealized Losses	(206)	(77)
Fair Value	160,854	181,976
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Cost	38,172	47,502
Gross Unrealized Gains	17,343	19,833
Gross Unrealized Losses	(206)	(62)
Fair Value	55,309	67,273
Mutual funds invested in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Cost	20,307	20,126
Gross Unrealized Gains	211	0
Gross Unrealized Losses	0	(15)
Fair Value	20,518	20,111
Total marketable debt securities by maturity dates
Schedule of Available-for-sale Securities [Line Items]
Cost	83,865	94,540
Gross Unrealized Gains	1,162	52
Gross Unrealized Losses	0	0
Fair Value	$ 85,027	$ 94,592

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Investment Securities Available for Sale (Maturity Dates of Marketable Debt Securities) (Details) $ in Thousands	Jun. 30, 2016 USD ($)
U.S. Government securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	$ 27,456
Under 1 Year	0
1 Year up to 5 Years	27,456
More than 5 Years	0
Corporate securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	35,660
Under 1 Year	2,271
1 Year up to 5 Years	33,389
More than 5 Years	0
U.S. mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	7,343
Under 1 Year	0
1 Year up to 5 Years	49
More than 5 Years	7,294
Commercial mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	3,675
Under 1 Year	0
1 Year up to 5 Years	0
More than 5 Years	3,675
U.S. asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Market Value	2,115
Under 1 Year	0
1 Year up to 5 Years	2,115
More than 5 Years	0
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Market Value	7,985
Under 1 Year	7,985
1 Year up to 5 Years	0
More than 5 Years	0
Index-linked U.S. bonds
Schedule of Available-for-sale Securities [Line Items]
Market Value	793
Under 1 Year	0
1 Year up to 5 Years	793
More than 5 Years	0
Total marketable debt securities by maturity dates
Schedule of Available-for-sale Securities [Line Items]
Market Value	85,027
Under 1 Year	10,256
1 Year up to 5 Years	63,802
More than 5 Years	$ 10,969

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Investment Securities Available for Sale (Securities with Continuous Unrealized Losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
In loss position for Less than 12 months, Fair Value	$ 0	$ 15,991
In loss position for Less than 12 months, Unrealized Losses	0	(77)
Total Fair Value	5,794	15,991
In loss position for 12 months or more, Fair Value	5,794	0
In loss position for 12 months or more, Unrealized Losses	(206)	0
Total Unrealized Losses	(206)	(77)
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
In loss position for Less than 12 months, Fair Value	0	5,938
In loss position for Less than 12 months, Unrealized Losses	0	(62)
Total Fair Value	5,794	5,938
In loss position for 12 months or more, Fair Value	5,794	0
In loss position for 12 months or more, Unrealized Losses	(206)	0
Total Unrealized Losses	$ (206)	(62)
Mutual funds invested in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
In loss position for Less than 12 months, Fair Value		10,053
In loss position for Less than 12 months, Unrealized Losses		(15)
Total Fair Value		10,053
In loss position for 12 months or more, Fair Value		0
In loss position for 12 months or more, Unrealized Losses		0
Total Unrealized Losses		$ (15)

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Investment Securities Available for Sale (Gross Realized Gains and Losses on Available-for-Sale Securities) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Gross realized gains on sales	$ 206	$ 520	$ 955	$ 14,084
Gross realized losses on sales	(67)	(710)	(249)	(1,245)
Gains (losses) on sale of investment securities available for sale	139	(190)	706	12,839
Gross realized losses on other-than-temporary impairments	$ (49)	$ 0	$ (4,862)	$ 0

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Investment Securities Available for Sale (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Gross realized losses on other-than-temporary impairments	$ (49)	$ 0	$ (4,862)	$ 0
Proceeds from investment securities sales			67,033	118,261
Maturities of investment securities			343	1,737
Morgans Hotel Group Co. [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross realized losses on other-than-temporary impairments			(4,772)
Corporate Securities and U.S. Government Securities
Schedule of Available-for-sale Securities [Line Items]
Maturities of investment securities			$ 5,269	$ 5,267

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Long-Term Investments (Long-term Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Long-term Investments [Abstract]
Investments accounted at cost	$ 39,028	$ 41,231
Investments accounted for under the equity method	20,341	21,495
Long-term investments	$ 59,369	$ 62,726

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Long-Term Investments (Cost-Method Investments) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Cost-method Investments [Line Items]
Cost-method investments, carrying value	$ 39,028		$ 41,231
Cost-method investments, fair value	42,026		44,769
Cash distributions from cost method investments	(1,000)	$ (371)
Purchase of long-term investments	50	$ 5,000
Reinsurance Company
Schedule of Cost-method Investments [Line Items]
Purchase of long-term investments	5,000
Investments partnerships
Schedule of Cost-method Investments [Line Items]
Cost-method investments, carrying value	38,527		40,730
Cost-method investments, fair value	41,522		44,217
Real estate partnership
Schedule of Cost-method Investments [Line Items]
Cost-method investments, carrying value	501		501
Cost-method investments, fair value	$ 504		$ 552

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Long-Term Investments (Equity-Method Investments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Investments accounted for under the equity method	$ 20,341		$ 20,341		$ 21,495
Distributions of equity method investment			572	$ 1,754
Equity in earnings (losses) from investments	1,089	$ (2,163)	(582)	$ (1,551)
Indian Creek Investors LP
Schedule of Equity Method Investments [Line Items]
Investments accounted for under the equity method	$ 4,929		$ 4,929		4,989
Equity-method ownership percentage	20.13%		20.13%
Boyar Value Fund
Schedule of Equity Method Investments [Line Items]
Investments accounted for under the equity method	$ 7,312		$ 7,312		7,302
Equity-method ownership percentage	30.65%		30.65%
Quoted market value	$ 7,312		$ 7,312
Ladenburg Thalmann Financial Services Inc.
Schedule of Equity Method Investments [Line Items]
Investments accounted for under the equity method	$ 8,100		$ 8,100		9,204
Equity-method ownership percentage	7.75%		7.75%
Quoted market value	$ 33,491		$ 33,491
Castle Brands, Inc.
Schedule of Equity Method Investments [Line Items]
Investments accounted for under the equity method	$ 0		$ 0		$ 0
Equity-method ownership percentage	7.91%		7.91%
Quoted market value	$ 9,250		$ 9,250

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New Valley LLC (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($) unit	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) unit	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) building	Apr. 30, 2015 USD ($)
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 206,139		$ 206,139		$ 217,168
Equity in earnings (losses) from investments	1,089	$ (2,163)	(582)	$ (1,551)
Investments in real estate ventures			11,806	34,857
Distributions from non-consolidated real estate businesses			(17,983)	0
Investments in real estate, net	23,328		23,328		$ 23,318
Escena
Schedule of Investments [Line Items]
Operating income (loss)	(299)	(173)	209	552
Apartment Buildings | ST Portfolio, Highgrove [Member]
Schedule of Investments [Line Items]
Number of real estate properties sold | building					1
Number of real estate properties | building					2
Apartment Buildings | ST Portfolio, Phoenix [Member]
Schedule of Investments [Line Items]
Number of real estate properties sold | building					1
Number of real estate properties | building					3
New Valley LLC [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures	206,139		206,139		$ 217,168
Interest costs capitalized			4,836
Investments in real estate, net	$ 23,328		$ 23,328		23,318
New Valley LLC [Member] | Douglas Elliman Realty LLC [Member]
Schedule of Investments [Line Items]
Ownership percentage by parent	70.59%		70.59%
New Valley LLC [Member] | 10 Madison Square Park West (1107 Broadway)
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 9,188		$ 9,188		11,391
New Valley LLC [Member] | The Marquand (11 East 68th Street) [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 9,333		$ 9,333		13,900
Equity in earnings (losses) from investments		1,501
Number of units in real estate property sold | unit	3		3
New Valley LLC [Member] | 11 Beach Street
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 13,702		$ 13,702		13,209
New Valley LLC [Member] | 20 Times Square (701 Seventh Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures	16,487		16,487		14,985
New Valley LLC [Member] | 111 Murray Street
Schedule of Investments [Line Items]
Investments in real estate ventures	25,308		25,308		25,567
New Valley LLC [Member] | 160 Leroy Street
Schedule of Investments [Line Items]
Investments in real estate ventures	4,511		4,511		3,952
New Valley LLC [Member] | 215 Chrystie Street
Schedule of Investments [Line Items]
Investments in real estate ventures	5,729		5,729		5,592
New Valley LLC [Member] | The Dutch (25-19 43rd Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures	1,129		1,129		1,077
New Valley LLC [Member] | Queens Plaza (23-10 Queens Plaza South)
Schedule of Investments [Line Items]
Investments in real estate ventures	16,834		16,834		16,177
New Valley LLC [Member] | 87 Park (8701 Collins Avenue)
Schedule of Investments [Line Items]
Investments in real estate ventures	8,846		8,846		8,658
New Valley LLC [Member] | 125 Greenwich Street
Schedule of Investments [Line Items]
Investments in real estate ventures	9,780		9,780		9,750
New Valley LLC [Member] | West Hollywood Edition (9040 Sunset Boulevard)
Schedule of Investments [Line Items]
Investments in real estate ventures	7,050		7,050		10,510
New Valley LLC [Member] | 76 Eleventh Avenue
Schedule of Investments [Line Items]
Investments in real estate ventures	18,867		18,867		17,967
New Valley LLC [Member] | Monad Terrace
Schedule of Investments [Line Items]
Investments in real estate ventures	7,774		7,774		6,608
New Valley LLC [Member] | Takanasee
Schedule of Investments [Line Items]
Investments in real estate ventures	4,916		4,916		4,680
New Valley LLC [Member] | ST Portfolio and Maryland Portfolio [Member]
Schedule of Investments [Line Items]
Distributions from non-consolidated real estate businesses			(8,707)
New Valley LLC [Member] | Maryland Portfolio
Schedule of Investments [Line Items]
Investments in real estate ventures	0		0		0
Distributions from non-consolidated real estate businesses				(493)
New Valley LLC [Member] | ST Portfolio
Schedule of Investments [Line Items]
Investments in real estate ventures	9,193		9,193		15,754
New Valley LLC [Member] | Park Lane Hotel and Coral Beach and Tennis Club [Member]
Schedule of Investments [Line Items]
Investments in real estate ventures			3,005	1,980
New Valley LLC [Member] | Park Lane Hotel
Schedule of Investments [Line Items]
Investments in real estate ventures	21,138		21,138		19,697
New Valley LLC [Member] | Coral Beach and Tennis Club
Schedule of Investments [Line Items]
Investments in real estate ventures	3,162		3,162		3,159
New Valley LLC [Member] | Hotel Taiwana
Schedule of Investments [Line Items]
Investments in real estate ventures	7,786		7,786		7,069
New Valley LLC [Member] | The Plaza at Harmon Meadow
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 3,682		3,682		5,449
New Valley LLC [Member] | Chelsea Eleven LLC
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments		236
Distributions from non-consolidated real estate businesses				(236)
New Valley LLC [Member] | 20 Times Square, 160 Leroy Street, West Hollywood Edition, and Monad Terrace
Schedule of Investments [Line Items]
Investments in real estate ventures			8,801
New Valley LLC [Member] | 215 Chrystie Street, 76 Eleventh Avenue and Monad Terrace
Schedule of Investments [Line Items]
Investments in real estate ventures				27,091
New Valley LLC [Member] | 10 Madison Square West, the Marquand, West Hollywood Edition [Member]
Schedule of Investments [Line Items]
Distributions from non-consolidated real estate businesses			$ (19,985)
New Valley LLC [Member] | Insurance consulting company
Schedule of Investments [Line Items]
Equity-method ownership percentage	50.00%		50.00%
New Valley LLC [Member] | Harmon Meadow
Schedule of Investments [Line Items]
Distributions from non-consolidated real estate businesses			$ (235)
New Valley LLC [Member] | Escena
Schedule of Investments [Line Items]
Investments in real estate, net	$ 10,644		10,644		10,716
New Valley LLC [Member] | Escena | Escena
Schedule of Investments [Line Items]
Land and land improvements	8,907		8,907		8,907
Building and building improvements	1,874		1,874		1,875
Investments in real estate, net	2,001		2,001		1,923
Total investment in Escena before depreciation	12,782		12,782		12,705
Less accumulated depreciation	(2,138)		(2,138)		(1,989)
Assets of Escena, net	10,644		10,644		10,716
New Valley LLC [Member] | Sagaponack
Schedule of Investments [Line Items]
Investments in real estate, net	12,684		12,684		12,602
Total investment in Escena before depreciation						$ 12,502
New Valley LLC [Member] | Condominium and Mixed Use Development
Schedule of Investments [Line Items]
Investments in real estate ventures	159,454		159,454		164,023
Equity in earnings (losses) from investments	2,962	138	1,779	675
Maximum exposure to loss as a result of this investment	$ 140,667		$ 140,667
New Valley LLC [Member] | Condominium and Mixed Use Development | Minimum
Schedule of Investments [Line Items]
Equity-method ownership percentage	3.10%		3.10%
New Valley LLC [Member] | Condominium and Mixed Use Development | Maximum
Schedule of Investments [Line Items]
Equity-method ownership percentage	49.50%		49.50%
New Valley LLC [Member] | Condominium and Mixed Use Development | 10 Madison Square Park West (1107 Broadway)
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments	$ 3,788		$ 4,211
New Valley LLC [Member] | Condominium and Mixed Use Development | Other Condominiums and Mixed-Use Development Projects [Member]
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments	(826)		34
New Valley LLC [Member] | Condominium and Mixed Use Development | The Marquand (11 East 68th Street) [Member]
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(962)
New Valley LLC [Member] | Condominium and Mixed Use Development | 11 Beach Street
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(160)
New Valley LLC [Member] | Condominium and Mixed Use Development | 111 Murray Street
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(247)
New Valley LLC [Member] | Condominium and Mixed Use Development | 215 Chrystie Street
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(144)
New Valley LLC [Member] | Condominium and Mixed Use Development | Queens Plaza (23-10 Queens Plaza South)
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(122)
New Valley LLC [Member] | Condominium and Mixed Use Development | 87 Park (8701 Collins Avenue)
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(250)
New Valley LLC [Member] | Condominium and Mixed Use Development | West Hollywood Edition (9040 Sunset Boulevard)
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(177)
New Valley LLC [Member] | Condominium and Mixed Use Development | Monad Terrace
Schedule of Investments [Line Items]
Equity in earnings (losses) from investments			(404)
New Valley LLC [Member] | Apartment Buildings
Schedule of Investments [Line Items]
Investments in real estate ventures	9,193		9,193		15,754
Equity in earnings (losses) from investments	1,630	1,848	2,146	1,801
Maximum exposure to loss as a result of this investment	$ 9,193		$ 9,193
New Valley LLC [Member] | Apartment Buildings | Minimum
Schedule of Investments [Line Items]
Equity-method ownership percentage	7.60%		7.60%
New Valley LLC [Member] | Apartment Buildings | Maximum
Schedule of Investments [Line Items]
Equity-method ownership percentage	16.30%		16.30%
New Valley LLC [Member] | Hotels
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 32,086		$ 32,086		29,925
Equity in earnings (losses) from investments	(189)	(261)	(844)	(1,006)
Maximum exposure to loss as a result of this investment	$ 32,086		$ 32,086
New Valley LLC [Member] | Hotels | Minimum
Schedule of Investments [Line Items]
Equity-method ownership percentage	5.20%		5.20%
New Valley LLC [Member] | Hotels | Maximum
Schedule of Investments [Line Items]
Equity-method ownership percentage	49.00%		49.00%
New Valley LLC [Member] | Commercial
Schedule of Investments [Line Items]
Investments in real estate ventures	$ 3,682		$ 3,682		5,449
Equity in earnings (losses) from investments	(1,744)	$ 27	(1,532)	$ 27
Maximum exposure to loss as a result of this investment	3,682		3,682
New Valley LLC [Member] | Other
Schedule of Investments [Line Items]
Investments in real estate ventures	1,724		1,724		$ 2,017
Douglas Elliman Realty LLC [Member]
Schedule of Investments [Line Items]
Proceeds from commissions received	$ 5,674		$ 8,079

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Notes Payable, Long-Term Debt and Other Obligations (Details) - USD ($)			6 Months Ended	12 Months Ended
	May 09, 2016	Feb. 03, 2015	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			$ 1,161,518,000	$ 895,168,000
Less: Debt issuance costs			(34,172,000)	(30,141,000)
Total notes payable, long-term debt and other obligations			1,127,346,000	865,027,000
Less: Current maturities			(16,615,000)	(8,919,000)
Amount due after one year			1,110,731,000	856,108,000
Fair value of derivatives embedded within convertible debt			126,932,000	144,042,000
Common Stock
Debt Instrument [Line Items]
Note conversion (in shares)		2,338,930
Senior Notes | 7.75% Senior Secured Notes due 2021, including premium of $15,391 and $8,014
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			850,391,000	608,014,000
Premium			15,391,000	8,014,000
Interest rate	7.75%
Redemption price	103.50%
Net proceeds from issuance of debt	$ 236,900,000
Principal amount	$ 235,000,000		835,000,000
Convertible Debt | 7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $121,788 and $132,119
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			108,212,000	97,881,000
Unamortized discount			$ 121,788,000	132,119,000
Interest rate			7.50%
Fair value of derivatives embedded within convertible debt			$ 61,998,000	$ 72,083,000
Note conversion (in shares)			62.5743	62.5743
Convertible Debt | 5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $79,010 and $86,136
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			$ 179,740,000	$ 172,614,000
Unamortized discount			$ 79,010,000	86,136,000
Interest rate			5.50%
Fair value of derivatives embedded within convertible debt			$ 64,934,000	$ 71,959,000
Note conversion (in shares)			40.5891	40.5891
Convertible Debt | 6.75% Variable Interest Senior Convertible Note due 2015
Debt Instrument [Line Items]
Interest rate		6.75%
Convertible principal balance		$ 25,000,000
Principal amount		50,000,000
Increase in equity from conversion		$ 25,000,000
Line of Credit | Liggett
Debt Instrument [Line Items]
Amount outstanding			$ 15,955,000
Remaining borrowing capacity			44,000,000
Line of Credit | Term loan under credit facility | Liggett
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			3,147,000	$ 3,269,000
Line of Credit | Revolving credit facility | Liggett
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			12,808,000	3,213,000
Equipment loans | Liggett
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			6,866,000	9,716,000
Other
Debt Instrument [Line Items]
Notes payable, long-term debt and other obligations			$ 354,000	$ 461,000

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Notes Payable, Long-Term Debt and Other Obligations (Convertible Notes Table) (Details) - Convertible Debt	6 Months Ended	12 Months Ended
	Jun. 30, 2016 shares	Dec. 31, 2015 shares
7.5% Variable Interest Senior Convertible Notes due 2019
Debt Instrument [Line Items]
Conversion Price (in dollars per share)	15.98	15.98
Note conversion (in shares)	62.5743	62.5743
5.5% Variable Interest Senior Convertible Debentures due 2020
Debt Instrument [Line Items]
Conversion Price (in dollars per share)	24.64	24.64
Note conversion (in shares)	40.5891	40.5891

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Notes Payable, Long-Term Debt and Other Obligations (Non Cash Interest Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Debt Disclosure [Abstract]
Amortization of debt discount, net	$ 8,653	$ 6,213	$ 16,609	$ 11,840
Amortization of debt issuance costs	1,401	1,022	2,569	1,988
Non-cash Interest Expense	$ 10,054	$ 7,235	$ 19,178	$ 13,828

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Notes Payable, Long-Term Debt and Other Obligations (Fair Value of Notes Payable and Long Term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 1,513,012	$ 1,297,875
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable and long-term debt	$ 1,161,518	$ 895,168

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Contingencies (Overview and Bonds) (Details) - Liggett - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2009
Loss Contingencies [Line Items]
Tobacco product liability legal expenses and costs	$ 1,707	$ 3,158	$ 5,878	$ 5,713
Engle Progeny Cases | Florida
Loss Contingencies [Line Items]
Maximum bond required for judgments on appeal					$ 200,000
Maximum bond required for judgments on appeal per case					$ 5,000
Bonds | Putney, Calloway, Boatright, Buchanan and Ward Cases
Loss Contingencies [Line Items]
Security posted for appeal of judgment	$ 10,767		$ 10,767

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Contingencies (Cautionary Statement About Engle Progeny Cases) (Details) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Oct. 31, 2013 USD ($) case	Jun. 30, 2016 case	Jun. 30, 2016 USD ($) case
Engle Progeny Cases
Loss Contingencies [Line Items]
Cases with judgments (more than)		100	100
Liggett | Engle Progeny Cases
Loss Contingencies [Line Items]
Cases with verdicts		24	24
Cases with verdicts in favor of plaintiffs		15	15
Cases with verdicts in favor of defendants		9	9
Cases with verdicts in favor of plaintiffs and punitive damages awarded		4	4
Cases settled	4,900
Amount of litigation settlement to (against) entity | $	$ (110,000)
Liggett | Irimi and Cohen
Loss Contingencies [Line Items]
Cases with verdicts where defendants motion for new trial granted		2	2
Liggett and Vector Tobacco | Engle Progeny Cases
Loss Contingencies [Line Items]
Cases settled		1	175
Amount of litigation settlement to (against) entity | $			$ (5,999)

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Contingencies (Individual Actions) (Details) - Individual Actions Cases	Jun. 30, 2016 case
Loss Contingencies [Line Items]
Cases pending	38
Liggett
Loss Contingencies [Line Items]
Cases pending	3
Liggett | Maryland
Loss Contingencies [Line Items]
Cases pending	13
Liggett | Florida
Loss Contingencies [Line Items]
Cases pending	11
Liggett | New York
Loss Contingencies [Line Items]
Cases pending	7
Liggett | Louisiana
Loss Contingencies [Line Items]
Cases pending	3
Liggett | West Virginia
Loss Contingencies [Line Items]
Cases pending	2
Liggett | Missouri
Loss Contingencies [Line Items]
Cases pending	1
Liggett | Ohio
Loss Contingencies [Line Items]
Cases pending	1

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Contingencies (Engle Progeny Cases and Settlement) (Details) $ in Thousands	1 Months Ended						3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 28, 2015	Oct. 31, 2013 USD ($) case	May 31, 2003 USD ($) plaintiff	Jul. 31, 2000 USD ($)	Apr. 30, 2000 USD ($)	Jul. 31, 1999 plaintiff	Jun. 30, 2016 USD ($) case	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) case	Jun. 30, 2015 USD ($)	Dec. 31, 2013 USD ($)
Loss Contingencies [Line Items]
Litigation settlement and judgment expense							$ 0	$ 1,250	$ 2,350	$ 2,093
Engle Progeny Cases
Loss Contingencies [Line Items]
Number of plaintiffs | plaintiff						3
Compensatory damages awarded					$ 12,704
Punitive damages awarded				$ 145,000,000
Number of favorable plaintiff verdicts | plaintiff			1
Damages awarded and subsequently overturned			$ 5,831
Number of unfavorable plaintiff verdicts | plaintiff			2
Liggett | Engle Progeny Cases
Loss Contingencies [Line Items]
Punitive damages awarded				$ 790,000
Cases settled | case		4,900
Litigation settlement amount paid in lump sum		$ 61,600
Litigation settlement, installment term	14 years
Cases settled and dismissed | case		4,900
Litigation settlement and judgment expense											$ 86,213
Litigation settlement and judgment expense, amount discounted											$ 25,213
Discount rate		11.00%
Litigation settlement amount paid in installment payments		$ 48,000
Litigation settlement amount of estimated future payments per annum		$ 3,400
Cases pending | case							245		245
Liggett | Lukacs, Campbell, Douglas, Clay, Tullo, Ward Rizzuto, Lambert and Buchanan
Loss Contingencies [Line Items]
Payments for legal settlements									$ 39,773

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Contingencies (Engle Progeny Judgments Schedule) (Details) - USD ($) $ in Thousands		1 Months Ended				6 Months Ended
	Jan. 06, 2016	Feb. 28, 2015	Nov. 30, 2014	Aug. 31, 2014	May 31, 2013	Jun. 30, 2016
Liggett
Loss Contingencies [Line Items]
Compensatory damages accrued, paid or compromised						$ (24,328)
Punitive damages accrued, paid or compromised						(10,500)
Liggett | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						28,866
Punitive damages awarded						10,800
Liggett | Pending Litigation
Loss Contingencies [Line Items]
Compensatory damages awarded						4,538
Punitive damages awarded						300
Liggett | Lukacs v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						12,418
Punitive damages awarded						0
Liggett | Campbell v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						156
Punitive damages awarded						0
Liggett | Douglas v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						1,350
Punitive damages awarded						0
Liggett | Clay v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						349
Punitive damages awarded						1,000
Liggett | Putney v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						3,008
Punitive damages awarded						0
Liggett | Tullo v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						225
Punitive damages awarded						0
Liggett | Ward v R J Reynolds
Loss Contingencies [Line Items]
Attorneys' fees and costs awarded						981
Liggett | Ward v R J Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						1
Punitive damages awarded						0
Liggett | Calloway v RJ Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						1,530
Punitive damages awarded						0
Liggett | Buchanan v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						2,750
Punitive damages awarded						0
Liggett | Cohen v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded					$ 205
Apportioned fault percentage to defendant					10.00%
Liggett | Cohen v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						0
Punitive damages awarded						0
Liggett | Rizzuto v. R.J. Reynolds
Loss Contingencies [Line Items]
Amount of litigation settlement to (against) entity						(1,500)
Liggett | Rizzuto v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						3,479
Punitive damages awarded						0
Liggett | Irimi v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded				$ 31
Apportioned fault percentage to defendant				1.00%
Liggett | Irimi v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						0
Punitive damages awarded						0
Liggett | Lambert v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						3,600
Punitive damages awarded						9,500
Liggett | Boatright v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded			$ 12,750
Punitive damages awarded			$ 300
Liggett | Boatright v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						0
Punitive damages awarded						300
Liggett | Caprio v. R.J. Reynolds | Judicial Ruling
Loss Contingencies [Line Items]
Compensatory damages awarded						0
Punitive damages awarded						0
RJ Reynolds | Cohen v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded					$ 2,055
RJ Reynolds | Irimi v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded				$ 3,123
RJ Reynolds | Boatright v. R.J. Reynolds
Loss Contingencies [Line Items]
Apportioned fault percentage to plaintiff			15.00%
RJ Reynolds | Caprio v. R.J. Reynolds
Loss Contingencies [Line Items]
Economic damages awarded		$ 559
R.J. Reynolds, Phillip Morris, Lorillard, and Liggett | Calloway v RJ Reynolds
Loss Contingencies [Line Items]
Damages awarded						$ 16,100
Punitive damages reversed	$ 7,600
Phillip Morris | Boatright v. R.J. Reynolds
Loss Contingencies [Line Items]
Compensatory damages awarded			$ 15,000
Punitive damages awarded			$ 19,700
Apportioned fault percentage to defendant			85.00%

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Contingencies (Appeals of Engle Progeny Judgments, Maryland and Only Liggett Cases) (Details) $ in Thousands	1 Months Ended
	Mar. 31, 2012 case	Jun. 30, 2016 USD ($) case
Engle Progeny Cases
Loss Contingencies [Line Items]
Number of cases declined for review by supreme court	2
Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending		38
Liggett | Engle Progeny Cases
Loss Contingencies [Line Items]
Cases pending		245
Liggett | Putney, Calloway, Cohen, Irimi, Lambert, Boatright and Caprio [Member] | Minimum
Loss Contingencies [Line Items]
Estimate of possible loss | $		$ 0
Liggett | Putney, Calloway, Cohen, Irimi, Lambert, Boatright and Caprio [Member] | Maximum
Loss Contingencies [Line Items]
Estimate of possible loss | $		$ 4,838
Liggett | Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending		3
Pending claims with no activity		2
Maryland | Synergy Exposure Cases
Loss Contingencies [Line Items]
Cases pending		20
Maryland | Liggett | Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending		13

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Contingencies (Class Actions, Health Care Cost Recovery Actions, and Upcoming Trials) (Details) $ in Thousands	1 Months Ended					3 Months Ended	6 Months Ended
	Jul. 31, 2015 plaintiff claims case	Oct. 31, 2013 case	May 31, 2013 case	May 31, 2009	Jul. 31, 1999 plaintiff	Jun. 30, 2016 defendant case	Jun. 30, 2016 USD ($) defendant case	Dec. 31, 2001 case
Parsons v. AC & S Inc.
Loss Contingencies [Line Items]
Damages sought | $							$ 1,000
Number of defendants in bankruptcy | defendant						3	3
Department of Justice Lawsuit
Loss Contingencies [Line Items]
Required reporting period				10 years
Engle Progeny Cases
Loss Contingencies [Line Items]
Number of plaintiffs | plaintiff					3
Pending claims scheduled for trial						16	16
Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending						38	38
Pending claims scheduled for trial						2	2
Liggett | Class Actions
Loss Contingencies [Line Items]
Cases pending						3	3
Liggett | Crow Creek Sioux Tribe v. American Tobacco Company
Loss Contingencies [Line Items]
Cases pending						1	1
Liggett | Engle Progeny Cases
Loss Contingencies [Line Items]
Cases pending						245	245
Cases settled		4,900
Liggett | Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending						3	3
Liggett and Vector Tobacco | Engle Progeny Cases
Loss Contingencies [Line Items]
Cases settled						1	175
West Virginia | Tobacco Litigation Personal Injury Cases
Loss Contingencies [Line Items]
Cases pending								750
Number of mistrials			2
Claims dismissed			1
Number of plaintiffs	30
Number of consolidated trials | claims	6
Number of plaintiffs in each trial | plaintiff	5
West Virginia | Liggett | Tobacco Litigation Personal Injury Cases
Loss Contingencies [Line Items]
Cases pending						25	25
West Virginia | Liggett | Individual Actions Cases
Loss Contingencies [Line Items]
Cases pending						2	2

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Contingencies (MSA and Other State Settlement Agreements) (Details)		6 Months Ended	12 Months Ended	25 Months Ended
	Dec. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) sponsorship	Dec. 31, 2015 USD ($)	Mar. 31, 1998 USD ($) state
Health Care Cost Recovery Actions
Loss Contingencies [Line Items]
Number of states with settled litigation | state				46
Number of brand name sponsorships allowed | sponsorship		1
Brand name sponsorship period		12 months
Annual payment requirement				$ 9,000,000,000
Liggett
Loss Contingencies [Line Items]
Number of states with settled litigation | state				45
Liggett | Health Care Cost Recovery Actions
Loss Contingencies [Line Items]
Estimated litigation liability		$ 0
Percentage of cigarettes sales exceeds market share exemption		1.65%
Vector Tobacco | Health Care Cost Recovery Actions
Loss Contingencies [Line Items]
Estimated litigation liability		$ 0
Percentage of cigarettes sales exceeds market share exemption		0.28%
Liggett and Vector Tobacco | Health Care Cost Recovery Actions
Loss Contingencies [Line Items]
Annual payment requirement			$ 115,000,000
Payments for legal settlements	$ 100,000,000
Cigarettes | Sales Revenue | Liggett and Vector Tobacco
Loss Contingencies [Line Items]
Concentration risk percentage			3.30%

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Contingencies (Certain MSA Disputes) (Details) $ in Thousands	1 Months Ended	6 Months Ended	36 Months Ended
	Jun. 30, 2010 state	Jun. 30, 2016 USD ($) state	Dec. 31, 2015 USD ($)	Sep. 30, 2013 state	Jun. 30, 2013 state
2003 NPM Adjustment
Loss Contingencies [Line Items]
Number of states agreed to single arbitration		48
Aggregate number of settling states		49
Reduction in NPM adjustment, percent		20.00%
Number of settling states with diligent enforcement not contested	16
Combined allocable share, percentage	14.00%
Non-settling states				15
Non-settling states that did not diligently enforce escrow statutes		4		6
2003-2012 NPM Adjustment
Loss Contingencies [Line Items]
Settling states wit term sheet		22
Kentucky and Indiana | 2003 NPM Adjustment
Loss Contingencies [Line Items]
Non-settling states that did not diligently enforce escrow statutes					2
Pennsylvania and Maryland | 2003 NPM Adjustment
Loss Contingencies [Line Items]
Reduction in NPM adjustment, percent		50.00%
Missouri and New Mexico | 2003 NPM Adjustment
Loss Contingencies [Line Items]
Non-settling states that did not diligently enforce escrow statutes		2
Liggett and Vector Tobacco | 2004-2010 NPM Adjustment
Loss Contingencies [Line Items]
Amounts accrued | $		$ 20,000
Liggett and Vector Tobacco | Cost of Sales | Health Care Cost Recovery Actions, NPM Adjustment
Loss Contingencies [Line Items]
Settlement adjustment credit | $			$ 22,356
Liggett | 2011-2015 NPM Adjustment
Loss Contingencies [Line Items]
Amounts accrued | $		$ 28,600

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Contingencies (“Gross” v. “Net” Calculations and Other State Settlements) (Details) - Health Care Cost Recovery Actions		1 Months Ended				12 Months Ended		25 Months Ended
	Jan. 12, 2016 USD ($)	Mar. 31, 2016 USD ($)	Jul. 31, 2015 USD ($)	Oct. 31, 2014	Feb. 28, 2013	Dec. 31, 2010 USD ($)	Dec. 31, 2003 USD ($)	Mar. 31, 1998 USD ($) state
Loss Contingencies [Line Items]
Annual payment requirement								$ 9,000,000,000
Liggett
Loss Contingencies [Line Items]
Increase in market share value used in calculation of payment obligation					1.25%
Claims dismissed, Increase in market share value used in calculation of payment obligation				1.25%
Damages awarded		$ 8,100,000	$ 16,000,000
Number of states not included in settlement agreement | state								4
MINNESOTA | Liggett
Loss Contingencies [Line Items]
Annual payment requirement							$ 100,000
Florida | Liggett
Loss Contingencies [Line Items]
Annual payment requirement						$ 250,000
Amount of litigation settlement to (against) entity						$ (1,200,000)
Years annual payments required						21 years
Years annual payments required that are subject to inflation adjustment						12 years
MISSISSIPPI | Liggett
Loss Contingencies [Line Items]
Damages sought	$ 26,000,000

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Contingencies (Activity in Accruals for MSA and Tobacco Litigation Schedule) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Loss Contingency Accrual [Roll Forward]
Current liabilities, beginning balance	$ 52,145	$ 29,471
Expenses	45,220	55,925
Change in MSA obligations capitalized as inventory	69	1,011
Payments	(38,392)	(23,787)
Interest on withholding	355	178
Current liabilities, ending balance	60,486	66,103
Noncurrent liabilities, beginning balance	44,812	51,509
Expenses		(195)
Reclassification from non-current liabilities	(1,089)	(3,305)
Interest on withholding	1,153	1,244
Noncurrent liabilities, ending balance	44,876	49,253
Settled Litigation
Loss Contingency Accrual [Roll Forward]
Current liabilities, beginning balance	29,241	26,322
Expenses	42,637	53,435
Change in MSA obligations capitalized as inventory	69	1,011
Payments	(12,847)	(18,142)
Interest on withholding	35	0
Current liabilities, ending balance	56,972	62,626
Noncurrent liabilities, beginning balance	20,094	25,809
Expenses		0
Reclassification from non-current liabilities	2,163	0
Interest on withholding	0	0
Noncurrent liabilities, ending balance	22,257	25,809
Pending Litigation
Loss Contingency Accrual [Roll Forward]
Current liabilities, beginning balance	22,904	3,149
Expenses	2,583	2,490
Change in MSA obligations capitalized as inventory	0	0
Payments	(25,545)	(5,645)
Interest on withholding	320	178
Current liabilities, ending balance	3,514	3,477
Noncurrent liabilities, beginning balance	24,718	25,700
Expenses		(195)
Reclassification from non-current liabilities	(3,252)	(3,305)
Interest on withholding	1,153	1,244
Noncurrent liabilities, ending balance	$ 22,619	$ 23,444

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Contingencies (Other Matters) (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Liggett Vector Brands | Bonds | Maximum
Loss Contingencies [Line Items]
Estimate of possible loss	$ 500

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Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost — benefits earned during the period	$ 137	$ 133	$ 274	$ 265
Interest cost on projected benefit obligation	1,355	1,280	2,710	2,598
Expected return on assets	(1,519)	(1,888)	(3,038)	(3,813)
Settlement loss	0	1,607	0	1,607
Amortization of net loss (gain)	464	278	928	569
Net expense	437	1,410	874	1,226
Other Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost — benefits earned during the period	1	2	2	4
Interest cost on projected benefit obligation	97	93	194	185
Expected return on assets	0	0	0	0
Settlement loss	0	0	0	0
Amortization of net loss (gain)	(19)	(24)	(38)	(48)
Net expense	$ 79	$ 71	$ 158	$ 141

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Restructuring (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring Reserve [Roll Forward]
Restructuring charges	$ 0	$ 0	$ 41	$ 0
Tobacco
Restructuring Reserve [Roll Forward]
Accrual balance as of January 1, 2016			490
Restructuring charges			41
Utilized			(424)
June 30, 2016	107		107
Tobacco | Employee Severance and Benefits
Restructuring Reserve [Roll Forward]
Accrual balance as of January 1, 2016			422
Restructuring charges			0
Utilized			(315)
June 30, 2016	107		107
Tobacco | Contract Termination/Exit Costs
Restructuring Reserve [Roll Forward]
Accrual balance as of January 1, 2016			48
Restructuring charges			41
Utilized			(89)
June 30, 2016	0		0
Tobacco | Other
Restructuring Reserve [Roll Forward]
Accrual balance as of January 1, 2016			20
Restructuring charges			0
Utilized			(20)
June 30, 2016	$ 0		$ 0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Income before provision for income taxes	$ 46,340	$ 30,622	$ 82,096	$ 64,970
Income tax expense using estimated annual effective income tax rate	18,793	11,347	33,317	24,145
Changes in effective tax rates	210	(78)	0	0
Impact of discrete items, net	0	(91)	49	(100)
Income tax expense	$ 19,003	$ 11,178	$ 33,366	$ 24,045

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Investments and Fair Value Measurements (Fair Value Measurements) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Assets:
Investment securities available for sale	$ 160,854	$ 181,976
Liabilities:
Fair value of derivatives embedded within convertible debt	126,932	144,042
Long-term investments	59,369	62,726
Investments in real estate, net	23,328	23,318
5.5% Variable Interest Senior Convertible Debentures due 2020 | Convertible Debt
Liabilities:
Fair value of derivatives embedded within convertible debt	$ 64,934	71,959
Interest rate	5.50%
Equity securities
Assets:
Investment securities available for sale	$ 55,309	67,273
Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	20,518	20,111
Fair Value, Measurements, Recurring
Assets:
Investment securities available for sale	160,854	181,976
Total	553,486	292,127
Liabilities:
Fair value of derivatives embedded within convertible debt	126,932	144,042
Fair Value, Measurements, Recurring | Equity securities
Assets:
Investment securities available for sale	55,309	67,273
Fair Value, Measurements, Recurring | Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	20,518	20,111
Fair Value, Measurements, Recurring | U.S. Government securities
Assets:
Investment securities available for sale	27,456	28,132
Fair Value, Measurements, Recurring | Corporate securities
Assets:
Investment securities available for sale	35,660	41,561
Fair Value, Measurements, Recurring | U.S. mortgage-backed securities
Assets:
Investment securities available for sale	7,343	5,790
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities
Assets:
Investment securities available for sale	3,675	8,728
Fair Value, Measurements, Recurring | U.S. asset-backed securities
Assets:
Investment securities available for sale	2,115	8,276
Fair Value, Measurements, Recurring | Commercial paper
Assets:
Investment securities available for sale	7,985
Fair Value, Measurements, Recurring | Index-linked U.S. bonds
Assets:
Investment securities available for sale	793	2,105
Fair Value, Measurements, Recurring | Fixed income securities
Assets:
Investment securities available for sale	85,027	94,592
Fair Value, Measurements, Recurring | Money market funds
Assets:
Cash and cash equivalents	336,845	93,915
Fair Value, Measurements, Recurring | Commercial paper
Assets:
Cash and cash equivalents	42,044
Fair Value, Measurements, Recurring | Certificates of deposit
Assets:
Cash and cash equivalents	2,976	3,469
Fair Value, Measurements, Recurring | Bonds
Assets:
Cash and cash equivalents	10,767	12,767
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Investment securities available for sale	75,827	87,384
Total	423,439	194,066
Liabilities:
Fair value of derivatives embedded within convertible debt	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities
Assets:
Investment securities available for sale	55,309	67,273
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	20,518	20,111
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. mortgage-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial mortgage-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. asset-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial paper
Assets:
Investment securities available for sale	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Index-linked U.S. bonds
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed income securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds
Assets:
Cash and cash equivalents	336,845	93,915
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial paper
Assets:
Cash and cash equivalents	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of deposit
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Bonds
Assets:
Cash and cash equivalents	10,767	12,767
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Assets:
Investment securities available for sale	85,027	94,592
Total	130,047	98,061
Liabilities:
Fair value of derivatives embedded within convertible debt	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Equity securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government securities
Assets:
Investment securities available for sale	27,456	28,132
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Corporate securities
Assets:
Investment securities available for sale	35,660	41,561
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. mortgage-backed securities
Assets:
Investment securities available for sale	7,343	5,790
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Commercial mortgage-backed securities
Assets:
Investment securities available for sale	3,675	8,728
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. asset-backed securities
Assets:
Investment securities available for sale	2,115	8,276
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Commercial paper
Assets:
Investment securities available for sale	7,985
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Index-linked U.S. bonds
Assets:
Investment securities available for sale	793	2,105
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Fixed income securities
Assets:
Investment securities available for sale	85,027	94,592
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Money market funds
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Commercial paper
Assets:
Cash and cash equivalents	42,044
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Certificates of deposit
Assets:
Cash and cash equivalents	2,976	3,469
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Bonds
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3)
Assets:
Investment securities available for sale	0	0
Total	0	0
Liabilities:
Fair value of derivatives embedded within convertible debt	126,932	144,042
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Equity securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Mutual funds invested in fixed income securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. mortgage-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Commercial mortgage-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. asset-backed securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Commercial paper
Assets:
Investment securities available for sale	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Index-linked U.S. bonds
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Fixed income securities
Assets:
Investment securities available for sale	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Money market funds
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Commercial paper
Assets:
Cash and cash equivalents	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Certificates of deposit
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Bonds
Assets:
Cash and cash equivalents	0	0
Fair Value, Measurements, Nonrecurring
Liabilities:
Long-term investments, fair value	6,396	11,189
Real estate held for sale, fair value		3,780
Nonrecurring nonfinancial assets subject to fair value measurements		14,969
Gain (loss) on long-term investments	(1,203)	(811)
Gain (loss) on real estate held for sale		(230)
Gain (loss) on long-term investments and real estate held for sale		(1,041)
Impairment charge included in earnings	1,203	811
Long-term investments	7,599	12,000
Investments in real estate, net		4,010
Impairment of real estate		230
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3)
Liabilities:
Long-term investments, fair value	$ 6,396	11,189
Real estate held for sale, fair value		3,780
Nonrecurring nonfinancial assets subject to fair value measurements		$ 14,969

XML

Investments and Fair Value Measurements (Quantitative Information about Level 3 Fair Value Measurements) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair value of derivatives embedded within convertible debt	$ 126,932	$ 144,042
Significant Unobservable Inputs (Level 3) | Discounted cash flow
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair value of derivatives embedded within convertible debt	$ 126,932	$ 144,042
Assumed annual stock dividend	5.00%	5.00%
Assumed annual cash dividend (in dollars per share)	$ 1.60	$ 1.60
Stock price (in dollars per share)	$ 22.42	$ 23.59
Convertible trading price (as a percentage of par value)	110.88%	114.31%
Volatility	19.33%	18.30%
Implied credit spread	6.50%	5.25%
Significant Unobservable Inputs (Level 3) | Discounted cash flow | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Implied credit spread	6.00%	5.00%
Significant Unobservable Inputs (Level 3) | Discounted cash flow | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Implied credit spread	7.00%	5.50%

XML

Segment Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Revenues		$ 438,273	$ 416,173	$ 819,073	$ 776,933
Operating income (loss)		70,720	55,803	132,879	99,521
Equity in earnings from real estate ventures		2,813	1,856	2,306	2,194
Depreciation and amortization		5,870	6,442	11,034	12,723
Capital expenditures				7,615	5,379
Litigation settlement and judgment expense		0	1,250	2,350	2,093
Pension settlement expense			1,607		1,607
Restructuring charges		0	0	41	0
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Revenues		0	0	0	0
Operating income (loss)		(6,911)	(4,904)	(13,716)	(9,843)
Equity in earnings from real estate ventures		0	0	0	0
Depreciation and amortization		428	435	870	872
Capital expenditures				26	0
Tobacco
Segment Reporting Information [Line Items]
Revenues	[1]	255,498	254,890	476,513	482,975
Restructuring charges				41
Tobacco | Operating Segments
Segment Reporting Information [Line Items]
Revenues		255,498	254,890	476,513	482,975
Operating income (loss)		66,016	56,215	127,499	105,885
Equity in earnings from real estate ventures		0	0	0	0
Depreciation and amortization		2,499	2,931	4,939	5,867
Capital expenditures				3,716	2,350
E-Cigarettes
Segment Reporting Information [Line Items]
Revenues		10	261	48	680
E-Cigarettes | Operating Segments
Segment Reporting Information [Line Items]
Revenues		10	261	48	680
Operating income (loss)		(91)	(2,400)	(284)	(5,564)
Equity in earnings from real estate ventures		0	0	0	0
Depreciation and amortization		0	0	0	0
Capital expenditures				0	0
Real Estate
Segment Reporting Information [Line Items]
Revenues		182,765	161,022	342,512	293,278
Real Estate | Operating Segments
Segment Reporting Information [Line Items]
Revenues		182,765	161,022	342,512	293,278
Operating income (loss)		11,706	6,892	19,380	9,043
Equity in earnings from real estate ventures		2,813	1,856	2,306	2,194
Depreciation and amortization		$ 2,943	$ 3,076	5,225	5,984
Capital expenditures				$ 3,873	$ 3,029

[1] Revenues and cost of sales include federal excise taxes of $106,861, $108,912, $197,707 and $206,271, respectively.

XML

Condensed Consolidating Financial Information (Narrative) (Details) - 7.75% Senior Secured Notes Due 2021 [Member] - Senior Notes	6 Months Ended
	Jun. 30, 2016 USD ($)	May 09, 2016 USD ($)
Condensed Financial Statements, Captions [Line Items]
Principal amount	$ 835,000,000	$ 235,000,000
Interest rate		7.75%
Indenture threshold for earnings for payment of dividends (less than)	$ 75,000,000
Leverage ratio requirement	3.0
Secured leverage ratio requirement	1.5

XML

Condensed Consolidating Financial Information (Balance Sheets) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 474,738	$ 240,368	$ 238,323	$ 326,365
Investment securities available for sale	160,854	181,976
Accounts receivable - trade, net	25,076	23,889
Intercompany receivables	0	0
Inventories	92,735	86,516
Income taxes receivable, net	218	2,841
Restricted assets	9,437	9,195
Other current assets	40,163	38,954
Total current assets	803,221	583,739
Property, plant and equipment, net	71,904	75,632
Investments in real estate, net	23,328	23,318
Long-term investments	59,369	62,726
Investments in real estate ventures	206,139	217,168
Investments in consolidated subsidiaries	0	0
Restricted assets	9,386	12,303
Goodwill and other intangible assets, net	262,866	263,959
Prepaid pension costs	21,302	20,650
Other assets	21,985	21,120
Total assets	1,479,500	1,280,615
Current liabilities:
Current portion of notes payable and long-term debt	16,615	8,919
Current portion of employee benefits	914	915
Intercompany payables	0	0
Income taxes payable, net	0	96
Litigation accruals and current payments due under the Master Settlement Agreement	60,486	52,145
Other current liabilities	140,388	154,217
Total current liabilities	218,403	216,292
Notes payable, long-term debt and other obligations, less current portion	1,110,731	856,108
Fair value of derivatives embedded within convertible debt	126,932	144,042
Non-current employee benefits	55,308	55,055
Deferred income taxes, net	87,914	79,429
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	55,648	51,850
Total liabilities	1,654,936	1,402,776
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	(257,525)	(206,047)
Non-controlling interest	82,089	83,886
Total stockholders' deficiency	(175,436)	(122,161)
Total liabilities and stockholders' deficiency	1,479,500	1,280,615
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	(16,435)	(11,293)
Inventories	0	0
Income taxes receivable, net	(12,124)	(5,372)
Restricted assets	0	0
Other current assets	0	0
Total current assets	(28,559)	(16,665)
Property, plant and equipment, net	0	0
Investments in real estate, net	0	0
Long-term investments	0	0
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	(517,365)	(532,501)
Restricted assets	0	0
Goodwill and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	0	0
Total assets	(545,924)	(549,166)
Current liabilities:
Current portion of notes payable and long-term debt	0	0
Current portion of employee benefits	0	0
Intercompany payables	(16,435)	(11,293)
Income taxes payable, net	(12,124)	(5,372)
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Other current liabilities	0	0
Total current liabilities	(28,559)	(16,665)
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	(28,559)	(16,665)
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	(517,365)	(532,501)
Non-controlling interest	0	0
Total stockholders' deficiency	(517,365)	(532,501)
Total liabilities and stockholders' deficiency	(545,924)	(549,166)
Parent/Issuer [Member]
Current assets:
Cash and cash equivalents	335,034	111,470	111,503	211,751
Investment securities available for sale	120,283	131,810
Accounts receivable - trade, net	0	0
Intercompany receivables	16,435	11,293
Inventories	0	0
Income taxes receivable, net	12,342	8,213
Restricted assets	0	0
Other current assets	618	575
Total current assets	484,712	263,361
Property, plant and equipment, net	1,452	1,711
Investments in real estate, net	0	0
Long-term investments	58,414	61,747
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	517,365	532,501
Restricted assets	1,720	1,713
Goodwill and other intangible assets, net	0	0
Prepaid pension costs	0	0
Other assets	7,621	7,582
Total assets	1,071,284	868,615
Current liabilities:
Current portion of notes payable and long-term debt	0	0
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
Other current liabilities	44,520	38,140
Total current liabilities	44,520	38,140
Notes payable, long-term debt and other obligations, less current portion	1,104,171	848,368
Fair value of derivatives embedded within convertible debt	126,932	144,042
Non-current employee benefits	40,075	39,244
Deferred income taxes, net	7,826	2,675
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	5,285	2,193
Total liabilities	1,328,809	1,074,662
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	(257,525)	(206,047)
Non-controlling interest	0	0
Total stockholders' deficiency	(257,525)	(206,047)
Total liabilities and stockholders' deficiency	1,071,284	868,615
Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	32,246	12,375	24,020	9,724
Investment securities available for sale	40,571	50,166
Accounts receivable - trade, net	15,015	15,913
Intercompany receivables	0	0
Inventories	92,735	86,516
Income taxes receivable, net	0	0
Restricted assets	8,523	7,781
Other current assets	3,794	3,747
Total current assets	192,884	176,498
Property, plant and equipment, net	51,122	54,097
Investments in real estate, net	0	0
Long-term investments	454	478
Investments in real estate ventures	0	0
Investments in consolidated subsidiaries	0	0
Restricted assets	7,666	10,590
Goodwill and other intangible assets, net	107,511	107,511
Prepaid pension costs	21,302	20,650
Other assets	12,002	11,769
Total assets	392,941	381,593
Current liabilities:
Current portion of notes payable and long-term debt	16,523	8,733
Current portion of employee benefits	914	915
Intercompany payables	585	586
Income taxes payable, net	11,501	5,464
Litigation accruals and current payments due under the Master Settlement Agreement	60,486	52,145
Other current liabilities	55,350	74,083
Total current liabilities	145,359	141,926
Notes payable, long-term debt and other obligations, less current portion	6,338	7,519
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	15,233	15,811
Deferred income taxes, net	35,138	33,791
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	45,010	44,982
Total liabilities	247,078	244,029
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	145,863	137,564
Non-controlling interest	0	0
Total stockholders' deficiency	145,863	137,564
Total liabilities and stockholders' deficiency	392,941	381,593
Subsidiary Non-Guarantors [Member]
Current assets:
Cash and cash equivalents	107,458	116,523	$ 102,800	$ 104,890
Investment securities available for sale	0	0
Accounts receivable - trade, net	10,061	7,976
Intercompany receivables	0	0
Inventories	0	0
Income taxes receivable, net	0	0
Restricted assets	914	1,414
Other current assets	35,751	34,632
Total current assets	154,184	160,545
Property, plant and equipment, net	19,330	19,824
Investments in real estate, net	23,328	23,318
Long-term investments	501	501
Investments in real estate ventures	206,139	217,168
Investments in consolidated subsidiaries	0	0
Restricted assets	0	0
Goodwill and other intangible assets, net	155,355	156,448
Prepaid pension costs	0	0
Other assets	2,362	1,769
Total assets	561,199	579,573
Current liabilities:
Current portion of notes payable and long-term debt	92	186
Current portion of employee benefits	0	0
Intercompany payables	15,850	10,707
Income taxes payable, net	623	4
Litigation accruals and current payments due under the Master Settlement Agreement	0	0
Other current liabilities	40,518	41,994
Total current liabilities	57,083	52,891
Notes payable, long-term debt and other obligations, less current portion	222	221
Fair value of derivatives embedded within convertible debt	0	0
Non-current employee benefits	0	0
Deferred income taxes, net	44,950	42,963
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	5,353	4,675
Total liabilities	107,608	100,750
Commitments and contingencies (Note 7)
Total Vector Group Ltd. stockholders' deficiency	371,502	394,937
Non-controlling interest	82,089	83,886
Total stockholders' deficiency	453,591	478,823
Total liabilities and stockholders' deficiency	$ 561,199	$ 579,573

XML

Condensed Consolidating Financial Information (Statements of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 438,273	$ 416,173	$ 819,073	$ 776,933
Expenses:
Cost of sales	283,631	279,204	520,053	521,222
Operating, selling, administrative and general expenses	83,922	79,916	163,750	154,097
Litigation settlement and judgment expense	0	1,250	2,350	2,093
Management fee expense	0	0	0	0
Restructuring charges	0	0	41	0
Operating income	70,720	55,803	132,879	99,521
Other income (expenses):
Interest expense	(36,369)	(31,761)	(67,089)	(63,507)
Change in fair value of derivatives embedded within convertible debt	7,416	5,256	17,110	11,716
Equity in earnings from real estate ventures	2,813	1,856	2,306	2,194
Equity in earnings (losses) from investments	1,089	(2,163)	(582)	(1,551)
Gain (loss) on sale of investment securities available for sale	139	(190)	706	12,839
Impairment of investment securities available for sale	(49)	0	(4,862)	0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	581	1,821	1,628	3,758
Income before provision for income taxes	46,340	30,622	82,096	64,970
Income tax benefit (expense)	(19,003)	(11,178)	(33,366)	(24,045)
Net income	27,337	19,444	48,730	40,925
Net income attributed to non-controlling interest	(3,322)	(1,837)	(5,377)	(2,097)
Net income attributed to Vector Group Ltd.	24,015	17,607	43,353	38,828
Comprehensive income attributed to non-controlling interest	(3,322)	(1,837)	(5,377)	(2,097)
Comprehensive income attributed to Vector Group Ltd.	23,746	17,834	43,127	44,037
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	(140)	(140)	(229)	(259)
Expenses:
Cost of sales	0	0	0	0
Operating, selling, administrative and general expenses	(140)	(140)	(229)	(259)
Litigation settlement and judgment expense		0	0	0
Management fee expense	(2,663)	(2,563)	(5,325)	(5,125)
Restructuring charges			0
Operating income	2,663	2,563	5,325	5,125
Other income (expenses):
Interest expense	0	0	0	0
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Equity in earnings from real estate ventures	0	0	0	0
Equity in earnings (losses) from investments	0	0	0	0
Gain (loss) on sale of investment securities available for sale	0	0	0	0
Impairment of investment securities available for sale	0		0
Equity income in consolidated subsidiaries	(46,441)	(35,745)	(82,051)	(71,744)
Management fee income	(2,663)	(2,563)	(5,325)	(5,125)
Other, net	0	0	0	0
Income before provision for income taxes	(46,441)	(35,745)	(82,051)	(71,744)
Income tax benefit (expense)	0	0	0	0
Net income	(46,441)	(35,745)	(82,051)	(71,744)
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	(46,441)	(35,745)	(82,051)	(71,744)
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive income attributed to Vector Group Ltd.	(46,320)	(35,201)	(82,073)	(68,918)
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	9,019	7,174	18,215	14,368
Litigation settlement and judgment expense		0	0	0
Management fee expense	0	0	0	0
Restructuring charges			0
Operating income	(9,019)	(7,174)	(18,215)	(14,368)
Other income (expenses):
Interest expense	(35,522)	(30,880)	(65,280)	(61,634)
Change in fair value of derivatives embedded within convertible debt	7,416	5,256	17,110	11,716
Equity in earnings from real estate ventures	0	0	0	0
Equity in earnings (losses) from investments	1,097	(2,147)	(558)	(1,543)
Gain (loss) on sale of investment securities available for sale	139	(190)	315	(336)
Impairment of investment securities available for sale	(49)		(90)
Equity income in consolidated subsidiaries	46,441	35,745	82,051	71,744
Management fee income	2,663	2,563	5,325	5,125
Other, net	(93)	1,192	307	2,257
Income before provision for income taxes	13,073	4,365	20,965	12,961
Income tax benefit (expense)	10,942	13,242	22,388	25,867
Net income	24,015	17,607	43,353	38,828
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	24,015	17,607	43,353	38,828
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive income attributed to Vector Group Ltd.	23,746	17,834	43,127	44,037
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	255,648	255,291	476,790	483,914
Expenses:
Cost of sales	168,614	175,334	305,358	332,994
Operating, selling, administrative and general expenses	18,943	22,555	37,216	43,892
Litigation settlement and judgment expense		1,250	2,350	2,093
Management fee expense	2,663	2,563	5,325	5,125
Restructuring charges			41
Operating income	65,428	53,589	126,500	99,810
Other income (expenses):
Interest expense	(843)	(879)	(1,802)	(1,870)
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Equity in earnings from real estate ventures	0	0	0	0
Equity in earnings (losses) from investments	(8)	(16)	(24)	(8)
Gain (loss) on sale of investment securities available for sale	0	0	391	13,175
Impairment of investment securities available for sale	0		(4,772)
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	244	200	481	520
Income before provision for income taxes	64,821	52,894	120,774	111,627
Income tax benefit (expense)	(24,907)	(21,219)	(48,293)	(45,403)
Net income	39,914	31,675	72,481	66,224
Net income attributed to non-controlling interest	0	0	0	0
Net income attributed to Vector Group Ltd.	39,914	31,675	72,481	66,224
Comprehensive income attributed to non-controlling interest	0	0	0	0
Comprehensive income attributed to Vector Group Ltd.	39,793	31,131	72,503	63,398
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	182,765	161,022	342,512	293,278
Expenses:
Cost of sales	115,017	103,870	214,695	188,228
Operating, selling, administrative and general expenses	56,100	50,327	108,548	96,096
Litigation settlement and judgment expense		0	0	0
Management fee expense	0	0	0	0
Restructuring charges			0
Operating income	11,648	6,825	19,269	8,954
Other income (expenses):
Interest expense	(4)	(2)	(7)	(3)
Change in fair value of derivatives embedded within convertible debt	0	0	0	0
Equity in earnings from real estate ventures	2,813	1,856	2,306	2,194
Equity in earnings (losses) from investments	0	0	0	0
Gain (loss) on sale of investment securities available for sale	0	0	0	0
Impairment of investment securities available for sale	0		0
Equity income in consolidated subsidiaries	0	0	0	0
Management fee income	0	0	0	0
Other, net	430	429	840	981
Income before provision for income taxes	14,887	9,108	22,408	12,126
Income tax benefit (expense)	(5,038)	(3,201)	(7,461)	(4,509)
Net income	9,849	5,907	14,947	7,617
Net income attributed to non-controlling interest	(3,322)	(1,837)	(5,377)	(2,097)
Net income attributed to Vector Group Ltd.	6,527	4,070	9,570	5,520
Comprehensive income attributed to non-controlling interest	(3,322)	(1,837)	(5,377)	(2,097)
Comprehensive income attributed to Vector Group Ltd.	$ 6,527	$ 4,070	$ 9,570	$ 5,520

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Condensed Consolidating Financial Information (Statements of Cash Flows) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	$ 78,825	$ 83,885
Cash flows from investing activities:
Sale of investment securities	67,033	118,261
Maturities of investment securities	343	1,737
Purchase of investment securities	(56,691)	(113,595)
Purchase of long-term investments	(50)	(5,000)
Proceeds from sale or liquidation of long-term investments	1,000	1,254
Investments in real estate ventures	(11,806)	(34,857)
Distributions from investments in real estate ventures	17,983	0
Increase in cash surrender value of life insurance policies	(393)	(1,118)
Decrease (increase) in restricted assets	2,674	(7,934)
Issuance of notes receivable	0	(4,410)
Investments in subsidiaries	0	0
Proceeds from sale of preferred securities	0	1,000
Proceeds from sale of fixed assets	5	3
Capital expenditures	(7,615)	(5,379)
Pay downs of investment securities	4,926	3,530
Investments in real estate, net	(81)	(12,502)
Net cash provided by (used in) investing activities	17,328	(59,010)
Cash flows from financing activities:
Proceeds from issuance of debt	243,282	22
Deferred financing costs	(6,600)	(625)
Repayments of debt	(2,917)	(3,374)
Borrowings under revolver	89,695	126,727
Repayments on revolver	(80,223)	(144,492)
Capital contributions received	0	0
Intercompany dividends paid	0	0
Dividends and distributions on common stock	(97,846)	(92,778)
Contributions from non-controlling interest	248	0
Distributions to non-controlling interest	(7,422)	0
Proceeds from exercise of Vector options	0	1,219
Tax benefit of options exercised	0	384
Net cash provided by (used in) financing activities	138,217	(112,917)
Net increase (decrease) in cash and cash equivalents	234,370	(88,042)
Cash and cash equivalents, beginning of period	240,368	326,365
Cash and cash equivalents, end of period	474,738	238,323
Consolidating Adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	(99,040)	(71,010)
Cash flows from investing activities:
Sale of investment securities	0	0
Maturities of investment securities	0	0
Purchase of investment securities	0	0
Purchase of long-term investments	0	0
Proceeds from sale or liquidation of long-term investments	0	0
Investments in real estate ventures	0	0
Distributions from investments in real estate ventures	0
Increase in cash surrender value of life insurance policies	0	0
Decrease (increase) in restricted assets	0	0
Issuance of notes receivable		0
Investments in subsidiaries	987	42,808
Proceeds from sale of fixed assets	0	0
Capital expenditures	0	0
Pay downs of investment securities	0	0
Investments in real estate, net	0	0
Net cash provided by (used in) investing activities	987	42,808
Cash flows from financing activities:
Proceeds from issuance of debt	0	0
Deferred financing costs	0	0
Repayments of debt	0	0
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	(987)	(42,808)
Intercompany dividends paid	99,040	71,010
Dividends and distributions on common stock	0	0
Contributions from non-controlling interest	0
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options		0
Tax benefit of options exercised		0
Net cash provided by (used in) financing activities	98,053	28,202
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Parent/Issuer [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	73,915	42,679
Cash flows from investing activities:
Sale of investment securities	62,312	103,846
Maturities of investment securities	343	1,737
Purchase of investment securities	(56,691)	(112,119)
Purchase of long-term investments	0	(5,000)
Proceeds from sale or liquidation of long-term investments	1,000	1,106
Investments in real estate ventures	0	0
Distributions from investments in real estate ventures	0
Increase in cash surrender value of life insurance policies	0	(717)
Decrease (increase) in restricted assets	(7)	(1,327)
Issuance of notes receivable		0
Investments in subsidiaries	(987)	(42,808)
Proceeds from sale of preferred securities		0
Proceeds from sale of fixed assets	0	0
Capital expenditures	(26)	0
Pay downs of investment securities	4,926	3,530
Investments in real estate, net	0	0
Net cash provided by (used in) investing activities	10,870	(51,752)
Cash flows from financing activities:
Proceeds from issuance of debt	243,225	0
Deferred financing costs	(6,600)	0
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	(97,846)	(92,778)
Contributions from non-controlling interest	0
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options		1,219
Tax benefit of options exercised		384
Net cash provided by (used in) financing activities	138,779	(91,175)
Net increase (decrease) in cash and cash equivalents	223,564	(100,248)
Cash and cash equivalents, beginning of period	111,470	211,751
Cash and cash equivalents, end of period	335,034	111,503
Subsidiary Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	75,513	99,159
Cash flows from investing activities:
Sale of investment securities	4,721	14,415
Maturities of investment securities	0	0
Purchase of investment securities	0	(1,476)
Purchase of long-term investments	0	0
Proceeds from sale or liquidation of long-term investments	0	0
Investments in real estate ventures	0	0
Distributions from investments in real estate ventures	0
Increase in cash surrender value of life insurance policies	(393)	(401)
Decrease (increase) in restricted assets	2,181	(6,607)
Issuance of notes receivable		0
Investments in subsidiaries	0	0
Proceeds from sale of preferred securities		0
Proceeds from sale of fixed assets	4	3
Capital expenditures	(3,716)	(2,350)
Pay downs of investment securities	0	0
Investments in real estate, net	0	0
Net cash provided by (used in) investing activities	2,797	3,584
Cash flows from financing activities:
Proceeds from issuance of debt	0	22
Deferred financing costs	0	(625)
Repayments of debt	(2,863)	(3,254)
Borrowings under revolver	89,695	126,727
Repayments on revolver	(80,223)	(144,492)
Capital contributions received	600	2,250
Intercompany dividends paid	(65,648)	(69,075)
Dividends and distributions on common stock	0	0
Contributions from non-controlling interest	0
Distributions to non-controlling interest	0
Proceeds from exercise of Vector options		0
Tax benefit of options exercised		0
Net cash provided by (used in) financing activities	(58,439)	(88,447)
Net increase (decrease) in cash and cash equivalents	19,871	14,296
Cash and cash equivalents, beginning of period	12,375	9,724
Cash and cash equivalents, end of period	32,246	24,020
Subsidiary Non-Guarantors [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	28,437	13,057
Cash flows from investing activities:
Sale of investment securities	0	0
Maturities of investment securities	0	0
Purchase of investment securities	0	0
Purchase of long-term investments	(50)	0
Proceeds from sale or liquidation of long-term investments	0	148
Investments in real estate ventures	(11,806)	(34,857)
Distributions from investments in real estate ventures	17,983
Increase in cash surrender value of life insurance policies	0	0
Decrease (increase) in restricted assets	500	0
Issuance of notes receivable		(4,410)
Investments in subsidiaries	0	0
Proceeds from sale of preferred securities		1,000
Proceeds from sale of fixed assets	1	0
Capital expenditures	(3,873)	(3,029)
Pay downs of investment securities	0	0
Investments in real estate, net	(81)	(12,502)
Net cash provided by (used in) investing activities	2,674	(53,650)
Cash flows from financing activities:
Proceeds from issuance of debt	57	0
Deferred financing costs	0	0
Repayments of debt	(54)	(120)
Borrowings under revolver	0	0
Repayments on revolver	0	0
Capital contributions received	387	40,558
Intercompany dividends paid	(33,392)	(1,935)
Dividends and distributions on common stock	0	0
Contributions from non-controlling interest	248
Distributions to non-controlling interest	(7,422)
Proceeds from exercise of Vector options		0
Tax benefit of options exercised		0
Net cash provided by (used in) financing activities	(40,176)	38,503
Net increase (decrease) in cash and cash equivalents	(9,065)	(2,090)
Cash and cash equivalents, beginning of period	116,523	104,890
Cash and cash equivalents, end of period	$ 107,458	$ 102,800