Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The following 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 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.  Any such debt securities may be issued by the Company and guaranteed by the guarantors, but any such debt securities would 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, 2017 and December 31, 2016, the related Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2017 and 2016, and the related Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2017 and 2016 of Vector Group Ltd. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2017
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	248,165		$	49,500	$	112,744	$	—		$	410,409
Investment securities available for sale	113,653			32,570		—		—			146,223
Accounts receivable - trade, net	—			17,502		7,977		—			25,479
Intercompany receivables	19,897			—		—		(19,897		)	—
Inventories	—			87,979		—		—			87,979
Income taxes receivable, net	14,534			—		—		(6,356		)	8,178
Restricted assets	—			4,645		4,152		—			8,797
Other current assets	471			3,779		25,208		—			29,458
Total current assets	396,720			195,975		150,081		(26,253		)	716,523
Property, plant and equipment, net	787			45,251		34,956		—			80,994
Investments in real estate, net	—			—		23,675		—			23,675
Long-term investments	74,812			359		—		—			75,171
Investments in real estate ventures	—			—		201,356		—			201,356
Investments in consolidated subsidiaries	493,411			—		—		(493,411		)	—
Restricted assets	1,495			2,259		—		—			3,754
Goodwill and other intangible assets, net	—			107,511		153,678		—			261,189
Prepaid pension costs	—			22,882		—		—			22,882
Other assets	7,946			12,313		14,483		—			34,742
Total assets	$	975,171		$	386,550	$	578,229	$	(519,664	)	$	1,420,286
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	20,760	$	181	$	—		$	20,941
Current portion of employee benefits	—			937		—		—			937
Intercompany payables	—			567		19,330		(19,897		)	—
Income taxes payable, net	—			5,250		1,106		(6,356		)	—
Litigation accruals and current payments due under the Master Settlement Agreement	—			73,410		—		—			73,410
Other current liabilities	44,896			57,230		43,699		—			145,825
Total current liabilities	44,896			158,154		64,316		(26,253		)	241,113
Notes payable, long-term debt and other obligations, less current portion	1,154,170			4,389		318		—			1,158,877
Fair value of derivatives embedded within convertible debt	95,627			—		—		—			95,627
Non-current employee benefits	43,693			15,691		—		—			59,384
Deferred income taxes, net	3,526			37,501		44,149		—			85,176
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,112			47,260		16,258		—			64,630
Total liabilities	1,343,024			262,995		125,041		(26,253		)	1,704,807
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(367,853		)	123,555		369,856		(493,411		)	(367,853		)
Non-controlling interest	—			—		83,332		—			83,332
Total stockholders' (deficiency) equity	(367,853		)	123,555		453,188		(493,411		)	(284,521		)
Total liabilities and stockholders' deficiency	$	975,171		$	386,550	$	578,229	$	(519,664	)	$	1,420,286

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 STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	272,297		$	199,812		$	(120	)	$	471,989
Expenses:
Cost of sales	—			186,907			127,987			—			314,894
Operating, selling, administrative and general expenses	9,612			18,411			55,280			(120		)	83,183
Litigation settlement and judgment expense	—			102			—			—			102
Management fee expense	—			2,767			—			(2,767		)	—
Operating (loss) income	(9,612		)	64,110			16,545			2,767			73,810
Other income (expenses):
Interest expense	(45,883		)	(802		)	(6		)	—			(46,691		)
Change in fair value of derivatives embedded within convertible debt	8,134			—			—			—			8,134
Equity in earnings from real estate ventures	—			—			15,291			—			15,291
Equity in losses from investments	(1,442		)	(17		)	—			—			(1,459		)
Gain on sale of investment securities available for sale	37			—			—			—			37
Impairment of investment securities available for sale	(87		)	—			—			—			(87		)
Equity in earnings in consolidated subsidiaries	54,828			—			—			(54,828		)	—
Management fee income	2,767			—			—			(2,767		)	—
Other, net	675			361			302			—			1,338
Income before provision for income taxes	9,417			63,652			32,132			(54,828		)	50,373
Income tax benefit (expense)	17,394			(24,854		)	(11,367		)	—			(18,827		)
Net income	26,811			38,798			20,765			(54,828		)	31,546
Net income attributed to non-controlling interest	—			—			(4,735		)	—			(4,735		)
Net income attributed to Vector Group Ltd.	$	26,811		$	38,798		$	16,030		$	(54,828	)	$	26,811
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(4,735	)	$	—		$	(4,735	)
Comprehensive income attributed to Vector Group Ltd.	$	25,326		$	37,112		$	16,030		$	(53,142	)	$	25,326

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 (losses) 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

				Six Months Ended June 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	529,870		$	357,566		$	(239	)	$	887,197
Expenses:
Cost of sales	—			362,661			228,156			—			590,817
Operating, selling, administrative and general expenses	19,463			36,437			112,291			(239		)	167,952
Litigation settlement and judgment expense	—			1,687			—			—			1,687
Management fee expense	—			5,534			—			(5,534		)	—
Operating (loss) income	(19,463		)	123,551			17,119			5,534			126,741
Other income (expenses):
Interest expense	(91,230		)	(1,670		)	(12		)	—			(92,912		)
Change in fair value of derivatives embedded within convertible debt	16,705			—			—			—			16,705
Loss on extinguishment of debt	(34,110		)	—			—			—			(34,110		)
Equity in earnings from real estate ventures	—			—			26,404			—			26,404
Equity in losses from investments	(2,491		)	(29		)	—			—			(2,520		)
Gain on sale of investment securities available for sale	187			—			—			—			187
Impairment of investment securities available for sale	(126		)	—			—			—			(126		)
Equity in earnings in consolidated subsidiaries	98,279			—			—			(98,279		)	—
Management fee income	5,534			—			—			(5,534		)	—
Other, net	1,619			697			681			—			2,997
(Loss) income before provision for income taxes	(25,096		)	122,549			44,192			(98,279		)	43,366
Income tax benefit (expense)	47,680			(47,405		)	(16,320		)	—			(16,045		)
Net income	22,584			75,144			27,872			(98,279		)	27,321
Net income attributed to non-controlling interest	—			—			(4,737		)	—			(4,737		)
Net income attributed to Vector Group Ltd.	$	22,584		$	75,144		$	23,135		$	(98,279	)	$	22,584
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(4,737	)	$	—		$	(4,737	)
Comprehensive income attributed to Vector Group Ltd.	$	21,223		$	73,493		$	23,135		$	(96,628	)	$	21,223

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2016
	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
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 losses from investments	(558		)	(24		)	—			—			(582		)
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 CASH FLOWS

				Six Months Ended June 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	58,546		$	138,336		$	31,116		$	(110,387	)	$	117,611
Cash flows from investing activities:
Sale of investment securities	22,396			—			—			—			22,396
Maturities of investment securities	93,368			—			—			—			93,368
Purchase of investment securities	(109,891		)	—			—			—			(109,891		)
Proceeds from sale or liquidation of long-term investments	—			—			466			—			466
Purchase of long-term investments	(26,000		)	—			—			—			(26,000		)
Investments in real estate ventures	—			—			(8,454		)	—			(8,454		)
Distributions from investments in real estate ventures	—			—			23,338			—			23,338
Increase in cash surrender value of life insurance policies	(447		)	(407		)	—			—			(854		)
Decrease (increase) in restricted assets	233			1,770			(3,238		)	—			(1,235		)
Issuance of notes receivable	—			—			(1,500		)	—			(1,500		)
Investments in subsidiaries	(5,749		)	—			—			5,749			—
Proceeds from sale of fixed assets	—			75			—			—			75
Capital expenditures	(6		)	(2,049		)	(6,291		)	—			(8,346		)
Pay downs of investment securities	1,620			—			—			—			1,620
Investments in real estate, net	—			—			(205		)	—			(205		)
Net cash (used in) provided by investing activities	(24,476		)	(611		)	4,116			5,749			(15,222		)
Cash flows from financing activities:
Proceeds from issuance of debt	850,000			—			20			—			850,020
Deferred financing costs	(19,200		)	—			—			—			(19,200		)
Repayments of debt	(835,000		)	(1,058		)	(87		)	—			(836,145		)
Borrowings under revolver	—			110,979			—			—			110,979
Repayments on revolver	—			(129,479		)	—			—			(129,479		)
Capital contributions received	—			300			5,449			(5,749		)	—
Intercompany dividends paid	—			(83,765		)	(26,622		)	110,387			—
Dividends and distributions on common stock	(104,750		)	—			—			—			(104,750		)
Distributions to non-controlling interest	—			—			(165		)	—			(165		)
Proceeds from issuance of Vector common stock	43,230			—			—			—			43,230
Net cash used in financing activities	(65,720		)	(103,023		)	(21,405		)	104,638			(85,510		)
Net (decrease) increase in cash and cash equivalents	(31,650		)	34,702			13,827			—			16,879
Cash and cash equivalents, beginning of period	279,815			14,798			98,917			—			393,530
Cash and cash equivalents, end of period	$	248,165		$	49,500		$	112,744		$	—		$	410,409

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		)
Investments in real estate, net	—			—			(81		)	—			(81		)
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
Pay downs of investment securities	4,926			—			—			—			4,926
Proceeds from sale of fixed assets	—			4			1			—			5
Investments in subsidiaries	(987		)	—			—			987			—
Capital expenditures	(26		)	(3,716		)	(3,873		)	—			(7,615		)
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