Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 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 had on December 31, 2016, outstanding $835,000 principal amount of its 7.75% Senior Secured Notes due 2021 that were 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 9.) The notes are not guaranteed by any of the Company’s subsidiaries engaged in the real estate businesses conducted through its subsidiary New Valley.

Presented herein are Condensed Consolidating Balance Sheets as of December 31, 2016 and 2015 and the related Condensed Consolidating Statements of Operations and Cash Flows for the years ended December 31, 2016, 2015 and 2014 of Vector Group. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).

Subsequent to year end, the Company issued $850,000 of its 6.125% Senior Secured Notes due 2025 in a private offering to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933 on January 27, 2017. The Company is using the net proceeds of the issuance to redeem $835,000 of its 7.75% Senior Secured Notes.

The Company and the guarantors have filed a shelf registration statement for the offering of debt securities on a delayed or continuous basis and the Company is filing this condensed consolidating financial information in connection therewith.

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2016
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	279,815		$	14,798	$	98,917	$	—		$	393,530
Investment securities available for sale	121,016			35,887		—		—			156,903
Accounts receivable - trade, net	—			11,775		7,026		—			18,801
Intercompany receivables	22,789			—		—		(22,789		)	—
Inventories	—			89,834		—		—			89,834
Income taxes receivable, net	18,387			—		—		(2,277		)	16,110
Restricted assets	—			6,416		914		—			7,330
Other current assets	517			4,428		18,010		—			22,955
Total current assets	442,524			163,138		124,867		(25,066		)	705,463
Property, plant and equipment, net	1,134			48,314		31,000		—			80,448
Investments in real estate, net	—			—		23,640		—			23,640
Long-term investments	52,308			388		501		—			53,197
Investments in real estate ventures	—			—		221,258		—			221,258
Investments in consolidated subsidiaries	501,659			—		—		(501,659		)	—
Restricted assets	1,728			2,258		—		—			3,986
Goodwill and other intangible assets, net	—			107,511		154,407		—			261,918
Prepaid pension costs	—			22,273		—		—			22,273
Other assets	7,534			12,118		12,200		—			31,852
Total assets	$	1,006,887		$	356,000	$	567,873	$	(526,725	)	$	1,404,035
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	39,333	$	175	$	—		$	39,508
Current portion of employee benefits	—			937		—		—			937
Intercompany payables	—			24		22,765		(22,789		)	—
Income taxes payable, net	—			1,089		1,188		(2,277		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			19,851		—		—			19,851
Other current liabilities	47,968			49,492		38,392		—			135,852
Total current liabilities	47,968			110,726		62,520		(25,066		)	196,148
Notes payable, long-term debt and other obligations, less current portion	1,127,180			5,372		391		—			1,132,943
Fair value of derivatives embedded within convertible debt	112,332			—		—		—			112,332
Non-current employee benefits	42,818			16,140		—		—			58,958
Deferred income taxes, net	7,420			40,136		45,529		—			93,085
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,169			49,861		12,811		—			63,841
Total liabilities	1,338,887			222,235		121,251		(25,066		)	1,657,307
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(332,000		)	133,765		367,894		(501,659		)	(332,000		)
Non-controlling interest	—			—		78,728		—			78,728
Total stockholders' (deficiency) equity	(332,000		)	133,765		446,622		(501,659		)	(253,272		)
Total liabilities and stockholders' deficiency	$	1,006,887		$	356,000	$	567,873	$	(526,725	)	$	1,404,035

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

				Year Ended December 31, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,011,322		$	680,105		$	(478	)	$	1,690,949
Expenses:
Cost of sales	—			672,515			424,829			—			1,097,344
Operating, selling, administrative and general expenses	36,242			72,359			232,444			(478		)	340,567
Litigation settlement and judgment expense	—			20,000			—			—			20,000
Management fee expense	—			10,649			—			(10,649		)	—
Restructuring charges	—			41			—			—			41
Operating (loss) income	(36,242		)	235,758			22,832			10,649			232,997
Other income (expenses):
Interest expense	(139,524		)	(3,438		)	(20		)	—			(142,982		)
Change in fair value of derivatives embedded within convertible debt	31,710			—			—			—			31,710
Equity in earnings from real estate ventures	—			—			5,200			—			5,200
Equity in losses from investments	(2,664		)	(90		)	—			—			(2,754		)
Gain on sale of investment securities available for sale	376			2,531			—			—			2,907
Impairment of investment securities available for sale	(609		)	(4,772		)	—			—			(5,381		)
Equity in earnings in consolidated subsidiaries	161,471			—			—			(161,471		)	—
Management fee income	10,649			—			—			(10,649		)	—
Other, net	2,780			1,013			939			—			4,732
Income before provision for income taxes	27,947			231,002			28,951			(161,471		)	126,429
Income tax benefit (expense)	43,180			(83,008		)	(9,335		)	—			(49,163		)
Net income	71,127			147,994			19,616			(161,471		)	77,266
Net income attributed to non-controlling interest	—			—			(6,139		)	—			(6,139		)
Net income attributed to Vector Group Ltd.	$	71,127		$	147,994		$	13,477		$	(161,471	)	$	71,127
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(6,139	)	$	—		$	(6,139	)
Comprehensive income attributed to Vector Group Ltd.	$	68,195		$	146,841		$	13,477		$	(160,318	)	$	68,195

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

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

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2016
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	135,820		$	112,562		$	60,640		$	(211,386	)	$	97,636
Cash flows from investing activities:
Sale of investment securities	105,815			10,255			—			—			116,070
Maturities of investment securities	10,822			—			—			—			10,822
Purchase of investment securities	(117,211		)	—			—			—			(117,211		)
Proceeds from sale or liquidation of long-term investments	4,552			—			—			—			4,552
Purchase of long-term investments	—			—			(50		)	—			(50		)
Investments in real estate ventures	—			—			(44,107		)	—			(44,107		)
Distributions from real estate ventures	—			—			33,204			—			33,204
Increase in cash surrender value of life insurance policies	—			(484		)	—			—			(484		)
(Increase) decrease in restricted assets	(15		)	9,696			500			—			10,181
Investments in subsidiaries	(19,219		)	—			—			19,219			—
Proceeds from sale of fixed assets	—			32			13			—			45
Purchase of subsidiaries	—			—			(250		)	—			(250		)
Repayment of notes receivable	—			—			4,410			—			4,410
Capital expenditures	(86		)	(6,445		)	(20,160		)	—			(26,691		)
Investments in real estate held for sale	—			—			(245		)	—			(245		)
Pay down of investment securities	9,212			—			—			—			9,212
Net cash (used in) provided by investing activities	(6,130		)	13,054			(26,685		)	19,219			(542		)
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	—			(5,226		)	(139		)	—			(5,365		)
Borrowings under revolver	—			144,294			—			—			144,294
Repayments on revolver	—			(110,614		)	—			—			(110,614		)
Capital contributions received	—			2,800			16,419			(19,219		)	—
Intercompany dividends paid	—			(154,447		)	(56,939		)	211,386			—
Dividends and distributions on common stock	(198,947		)	—			—			—			(198,947		)
Distributions to non-controlling interest	—			—			(11,545		)	—			(11,545		)
Contributions from non-controlling interest	—			—			248			—			248
Proceeds from exercise of Vector options	398			—			—			—			398
Tax benefit of options exercised	579			—			—			—			579
Net cash provided by (used in) financing activities	38,655			(123,193		)	(51,561		)	192,167			56,068
Net increase (decrease) in cash and cash equivalents	168,345			2,423			(17,606		)	—			153,162
Cash and cash equivalents, beginning of year	111,470			12,375			116,523			—			240,368
Cash and cash equivalents, end of year	$	279,815		$	14,798		$	98,917		$	—		$	393,530

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

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