Condensed Consolidating Financial Information

9 Months Ended

Sep. 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 September 30, 2016 and December 31, 2015, the related Condensed Consolidating Statements of Operations for the three and nine months ended September 30, 2016 and the related Condensed Consolidating Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 of Vector Group. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).

CONDENSED CONSOLIDATING BALANCE SHEETS

				September 30, 2016
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	287,097		$	44,934	$	113,843	$	—		$	445,874
Investment securities available for sale	132,849			42,804		—		—			175,653
Accounts receivable - trade, net	—			13,766		9,605		—			23,371
Intercompany receivables	19,347			—		—		(19,347		)	—
Inventories	—			87,622		—		—			87,622
Income taxes receivable, net	17,277			—		—		(9,990		)	7,287
Restricted assets	—			3,835		914		—			4,749
Other current assets	4,411			3,611		31,147		—			39,169
Total current assets	460,981			196,572		155,509		(29,337		)	783,725
Property, plant and equipment, net	1,270			50,146		26,471		—			77,887
Investments in real estate, net	—			—		23,630		—			23,630
Long-term investments	53,091			413		501		—			54,005
Investments in real estate ventures	—			—		211,825		—			211,825
Investments in consolidated subsidiaries	511,298			—		—		(511,298		)	—
Restricted assets	1,724			6,410		—		—			8,134
Goodwill and other intangible assets, net	—			107,511		154,408		—			261,919
Prepaid pension costs	—			21,628		—		—			21,628
Other assets	7,575			12,053		2,349		—			21,977
Total assets	$	1,035,939		$	394,733	$	574,693	$	(540,635	)	$	1,464,730
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	16,106	$	174	$	—		$	16,280
Current portion of employee benefits	—			914		—		—			914
Intercompany payables	—			1		19,346		(19,347		)	—
Income taxes payable, net	—			9,057		933		(9,990		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			86,298		—		—			86,298
Other current liabilities	29,948			39,149		44,768		—			113,865
Total current liabilities	29,948			151,525		65,221		(29,337		)	217,357
Notes payable, long-term debt and other obligations, less current portion	1,115,272			5,726		435		—			1,121,433
Fair value of derivatives embedded within convertible debt	120,820			—		—		—			120,820
Non-current employee benefits	40,490			14,961		—		—			55,451
Deferred income taxes, net	8,002			35,407		46,148		—			89,557
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	2,539			45,597		10,573		—			58,709
Total liabilities	1,317,071			253,216		122,377		(29,337		)	1,663,327
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(281,132		)	141,517		369,781		(511,298		)	(281,132		)
Non-controlling interest	—			—		82,535		—			82,535
Total stockholders' (deficiency) equity	(281,132		)	141,517		452,316		(511,298		)	(198,597		)
Total liabilities and stockholders' deficiency	$	1,035,939		$	394,733	$	574,693	$	(540,635	)	$	1,464,730

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 September 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	274,297		$	184,936		$	(129	)	$	459,104
Expenses:
Cost of sales	—			186,353			117,089			—			303,442
Operating, selling, administrative and general expenses	8,726			18,658			59,043			(129		)	86,298
Management fee expense	—			2,662			—			(2,662		)	—
Operating (loss) income	(8,726		)	66,624			8,804			2,662			69,364
Other income (expenses):
Interest expense	(36,531		)	(827		)	(7		)	—			(37,365		)
Change in fair value of derivatives embedded within convertible debt	6,112			—			—			—			6,112
Equity in earnings from real estate ventures	—			—			1,022			—			1,022
Equity in losses from investments	(1,485		)	(41		)	—			—			(1,526		)
Gain on sale of investment securities available for sale	142			—			—			—			142
Impairment of investment securities available for sale	(54		)	—			—			—			(54		)
Equity in earnings in consolidated subsidiaries	49,447			—			—			(49,447		)	—
Management fee income	2,662			—			—			(2,662		)	—
Other, net	1,205			259			(136		)	—			1,328
Income before provision for income taxes	12,772			66,015			9,683			(49,447		)	39,023
Income tax benefit (expense)	10,403			(21,289		)	(2,430		)	—			(13,316		)
Net income	23,175			44,726			7,253			(49,447		)	25,707
Net income attributed to non-controlling interest	—			—			(2,532		)	—			(2,532		)
Net income attributed to Vector Group Ltd.	$	23,175		$	44,726		$	4,721		$	(49,447	)	$	23,175
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(2,532	)	$	—		$	(2,532	)
Comprehensive income attributed to Vector Group Ltd.	$	24,858		$	46,197		$	4,721		$	(50,918	)	$	24,858

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	264,480		$	185,563		$	(109	)	$	449,934
Expenses:
Cost of sales	—			174,839			121,078			—			295,917
Operating, selling, administrative and general expenses	6,610			20,712			52,139			(109		)	79,352
Litigation settlement and judgment expense	—			3,750			—			—			3,750
Management fee expense	—			2,562			—			(2,562		)	—
Restructuring charges	—			1,548			—			—			1,548
Operating (loss) income	(6,610		)	61,069			12,346			2,562			69,367
Other income (expenses):
Interest expense	(31,609		)	(1,288		)	(1		)	—			(32,898		)
Change in fair value of derivatives embedded within convertible debt	7,044			—			—			—			7,044
Equity in losses from real estate ventures	—			—			(916		)	—			(916		)
Equity in losses from investments	(1,087		)	(16		)	—			—			(1,103		)
Loss on sale of investment securities available for sale	(821		)	—			—			—			(821		)
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Equity in earnings in consolidated subsidiaries	32,326			—			—			(32,326		)	—
Management fee income	2,562			—			—			(2,562		)	—
Other, net	1,148			(111		)	305			—			1,342
(Loss) income before provision for income taxes	(1,271		)	51,667			11,734			(32,326		)	29,804
Income tax benefit (expense)	13,737			(24,036		)	(3,395		)	—			(13,694		)
Net income	12,466			27,631			8,339			(32,326		)	16,110
Net income attributed to non-controlling interest	—			—			(3,644		)	—			(3,644		)
Net income attributed to Vector Group Ltd.	$	12,466		$	27,631		$	4,695		$	(32,326	)	$	12,466
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(3,644	)	$	—		$	(3,644	)
Comprehensive (loss) income attributed to Vector Group Ltd.	$	(11,816	)	$	9,469		$	4,695		$	(14,164	)	$	(11,816	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	751,087		$	527,448		$	(358	)	$	1,278,177
Expenses:
Cost of sales	—			491,711			331,784			—			823,495
Operating, selling, administrative and general expenses	26,941			55,874			167,591			(358		)	250,048
Litigation settlement and judgment expense	—			2,350			—			—			2,350
Management fee expense	—			7,987			—			(7,987		)	—
Restructuring charges	—			41			—			—			41
Operating (loss) income	(26,941		)	193,124			28,073			7,987			202,243
Other income (expenses):
Interest expense	(101,811		)	(2,629		)	(14		)	—			(104,454		)
Change in fair value of derivatives embedded within convertible debt	23,222			—			—			—			23,222
Equity in earnings from real estate ventures	—			—			3,328			—			3,328
Equity in losses from investments	(2,043		)	(65		)	—			—			(2,108		)
Gain on sale of investment securities available for sale	457			391			—			—			848
Impairment of investment securities available for sale	(144		)	(4,772		)	—			—			(4,916		)
Equity in earnings in consolidated subsidiaries	131,498			—			—			(131,498		)	—
Management fee income	7,987			—			—			(7,987		)	—
Other, net	1,512			740			704			—			2,956
Income before provision for income taxes	33,737			186,789			32,091			(131,498		)	121,119
Income tax benefit (expense)	32,791			(69,582		)	(9,891		)	—			(46,682		)
Net income	66,528			117,207			22,200			(131,498		)	74,437
Net income attributed to non-controlling interest	—			—			(7,909		)	—			(7,909		)
Net income attributed to Vector Group Ltd.	$	66,528		$	117,207		$	14,291		$	(131,498	)	$	66,528
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(7,909	)	$	—		$	(7,909	)
Comprehensive income attributed to Vector Group Ltd.	$	67,985		$	118,700		$	14,291		$	(132,991	)	$	67,985

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2015
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	748,394		$	478,841		$	(368	)	$	1,226,867
Expenses:
Cost of sales	—			507,833			309,306			—			817,139
Operating, selling, administrative and general expenses	20,978			64,604			148,235			(368		)	233,449
Litigation settlement and judgment expense	—			5,843			—			—			5,843
Management fee expense	—			7,687			—			(7,687		)	—
Restructuring charges	—			1,548			—			—			1,548
Operating (loss) income	(20,978		)	160,879			21,300			7,687			168,888
Other income (expenses):
Interest expense	(93,243		)	(3,158		)	(4		)	—			(96,405		)
Change in fair value of derivatives embedded within convertible debt	18,760			—			—			—			18,760
Equity in earnings from real estate ventures	—			—			1,278			—			1,278
(Loss) gain on sale of investment securities available for sale	(1,157		)	13,175			—			—			12,018
Impairment of investment securities available for sale	(4,224		)	(7,987		)	—			—			(12,211		)
Equity in losses from investments	(2,630		)	(24		)	—			—			(2,654		)
Equity in earnings in consolidated subsidiaries	104,070			—			—			(104,070		)	—
Management fee income	7,687			—			—			(7,687		)	—
Other, net	3,405			409			1,286			—			5,100
Income before provision for income taxes	11,690			163,294			23,860			(104,070		)	94,774
Income tax benefit (expense)	39,604			(69,439		)	(7,904		)	—			(37,739		)
Net income	51,294			93,855			15,956			(104,070		)	57,035
Net income attributed to non-controlling interest	—			—			(5,741		)	—			(5,741		)
Net income attributed to Vector Group Ltd.	$	51,294		$	93,855		$	10,215		$	(104,070	)	$	51,294
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(5,741	)	$	—		$	(5,741	)
Comprehensive income attributed to Vector Group Ltd.	$	32,221		$	72,867		$	10,215		$	(83,082	)	$	32,221

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	87,016		$	136,255		$	54,807		$	(156,635	)	$	121,443
Cash flows from investing activities:
Sale of investment securities	76,514			4,721			—			—			81,235
Maturities of investment securities	4,343			—			—			—			4,343
Purchase of investment securities	(90,106		)	—			—			—			(90,106		)
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	—			—			(23,358		)	—			(23,358		)
Distributions from investments in real estate ventures	—			—			23,041			—			23,041
Increase in cash surrender value of life insurance policies	—			(451		)	—			—			(451		)
(Increase) decrease in restricted assets	(11		)	8,126			500			—			8,615
Investments in subsidiaries	(1,103		)	—			—			1,103			—
Proceeds from sale of fixed assets	—			32			13			—			45
Capital expenditures	(33		)	(5,619		)	(13,505		)	—			(19,157		)
Repayments of notes receivable	—			—			4,410			—			4,410
Pay downs of investment securities	7,842			—			—			—			7,842
Investments in real estate, net	—			—			(130		)	—			(130		)
Net cash (used in) provided by investing activities	(1,554		)	6,809			(9,079		)	1,103			(2,721		)
Cash flows from financing activities:
Proceeds from issuance of debt	243,225			—			395			—			243,620
Deferred financing costs	(6,600		)	—			—			—			(6,600		)
Repayments of debt	—			(4,602		)	(96		)	—			(4,698		)
Borrowings under revolver	—			104,826			—			—			104,826
Repayments on revolver	—			(94,644		)	—			—			(94,644		)
Capital contributions received	—			700			403			(1,103		)	—
Intercompany dividends paid	—			(116,785		)	(39,850		)	156,635			—
Dividends and distributions on common stock	(147,270		)	—			—			—			(147,270		)
Contributions from non-controlling interest	—			—			248			—			248
Distributions to non-controlling interest	—			—			(9,508		)	—			(9,508		)
Proceeds from exercise of Vector options	398			—			—			—			398
Tax benefit of options exercised	412			—			—			—			412
Net cash provided by (used in) financing activities	90,165			(110,505		)	(48,408		)	155,532			86,784
Net increase (decrease) in cash and cash equivalents	175,627			32,559			(2,680		)	—			205,506
Cash and cash equivalents, beginning of period	111,470			12,375			116,523			—			240,368
Cash and cash equivalents, end of period	$	287,097		$	44,934		$	113,843		$	—		$	445,874

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2015
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	84,832		$	168,095		$	31,660		$	(144,569	)	$	140,018
Cash flows from investing activities:
Sale of investment securities	146,614			14,415			—			—			161,029
Maturities of investment securities	2,653			—			—			—			2,653
Purchase of investment securities	(156,521		)	(6,324		)	—			—			(162,845		)
Proceeds from sale or liquidation of long-term investments	1,106			—			182			—			1,288
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in real estate ventures	—			—			(43,280		)	—			(43,280		)
Investments in real estate, net	—			—			(12,512		)	—			(12,512		)
Distributions from investments in real estate ventures	—			—			11,205			—			11,205
Increase in cash surrender value of life insurance policies	(766		)	(459		)	—			—			(1,225		)
Increase in restricted assets	(2		)	(6,870		)	—			—			(6,872		)
Issuance of notes receivable	—			—			(4,410		)	—			(4,410		)
Repayments of notes receivable	—			—			4,000			—			4,000
Pay downs of investment securities	5,743			—			—			—			5,743
Proceeds from sale of fixed assets	—			3			—			—			3
Investments in subsidiaries	(53,511		)	—			—			53,511			—
Proceeds from sale of preferred securities	—			—			1,000						1,000
Capital expenditures	—			(3,305		)	(4,554		)	—			(7,859		)
Net cash used in investing activities	(64,684		)	(2,540		)	(48,369		)	53,511			(62,082		)
Cash flows from financing activities:
Proceeds from issuance of debt	—			1,519			—			—			1,519
Deferred financing costs	—			(624		)	—			—			(624		)
Repayments of debt	—			(4,786		)	(182		)	—			(4,968		)
Borrowings under revolver	—			130,691			—			—			130,691
Repayments on revolver	—			(146,655		)	—			—			(146,655		)
Capital contributions received	—			5,633			47,878			(53,511		)	—
Intercompany dividends paid	—			(134,215		)	(10,354		)	144,569			—
Dividends and distributions on common stock	(139,430		)	—			—			—			(139,430		)
Distributions to non-controlling interest	—			—			(564		)	—			(564		)
Proceeds from exercise of Vector options	1,321			—			—			—			1,321
Tax benefit of options exercised	756			—			—			—			756
Net cash (used in) provided by financing activities	(137,353		)	(148,437		)	36,778			91,058			(157,954		)
Net (decrease) increase in cash and cash equivalents	(117,205		)	17,118			20,069			—			(80,018		)
Cash and cash equivalents, beginning of period	211,751			9,724			104,890			—			326,365
Cash and cash equivalents, end of period	$	94,546		$	26,842		$	124,959		$	—		$	246,347