Condensed Consolidating Financial Information

9 Months Ended

Sep. 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 be 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, 2017 and December 31, 2016, the related Condensed Consolidating Statements of Operations for the three and nine months ended September 30, 2017 and 2016, and the related Condensed Consolidating Statements of Cash Flows for the nine months ended September 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

				September 30, 2017
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	205,577		$	88,245	$	102,238	$	—		$	396,060
Investment securities available for sale	122,007			32,638		—		—			154,645
Accounts receivable - trade, net	—			10,080		7,975		—			18,055
Intercompany receivables	21,027			—		—		(21,027		)	—
Inventories	—			84,587		—		—			84,587
Income taxes receivable, net	3,437			—		—		(3,437		)	—
Restricted assets	—			4,309		7,209		—			11,518
Other current assets	577			3,389		31,101		—			35,067
Total current assets	352,625			223,248		148,523		(24,464		)	699,932
Property, plant and equipment, net	752			43,663		39,179		—			83,594
Investments in real estate, net	—			—		23,742		—			23,742
Long-term investments	74,476			—		—		—			74,476
Investments in real estate ventures	—			—		210,089		—			210,089
Investments in consolidated subsidiaries	496,729			—		—		(496,729		)	—
Restricted assets	1,497			1,986		—		—			3,483
Goodwill and other intangible assets, net	—			107,511		160,668		—			268,179
Prepaid pension costs	—			23,186		—		—			23,186
Other assets	7,896			12,362		2,965		—			23,223
Total assets	$	933,975		$	411,956	$	585,166	$	(521,193	)	$	1,409,904
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	8,001	$	431	$	—		$	8,432
Current portion of employee benefits	—			937		—		—			937
Intercompany payables	—			754		20,273		(21,027		)	—
Income taxes payable, net	—			14,068		1,532		(3,437		)	12,163
Litigation accruals and current payments due under the Master Settlement Agreement	—			118,834		—		—			118,834
Other current liabilities	31,835			53,232		42,769		—			127,836
Total current liabilities	31,835			195,826		65,005		(24,464		)	268,202
Notes payable, long-term debt and other obligations, less current portion	1,171,509			3,891		510		—			1,175,910
Fair value of derivatives embedded within convertible debt	86,190			—		—		—			86,190
Non-current employee benefits	44,130			15,470		—		—			59,600
Deferred income taxes, net	1,655			32,704		37,424		—			71,783
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,376			44,717		20,300		—			66,393
Total liabilities	1,336,695			292,608		123,239		(24,464		)	1,728,078
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(402,720		)	119,348		377,381		(496,729		)	(402,720		)
Non-controlling interest	—			—		84,546		—			84,546
Total stockholders' (deficiency) equity	(402,720		)	119,348		461,927		(496,729		)	(318,174		)
Total liabilities and stockholders' deficiency	$	933,975		$	411,956	$	585,166	$	(521,193	)	$	1,409,904

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 September 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	293,884		$	190,860		$	(119	)	$	484,625
Expenses:
Cost of sales	—			207,800			130,316			—			338,116
Operating, selling, administrative and general expenses	8,431			18,253			56,607			(119		)	83,172
Litigation settlement and judgment expense	—			4,104			—			—			4,104
Management fee expense	—			2,767			—			(2,767		)	—
Operating (loss) income	(8,431		)	60,960			3,937			2,767			59,233
Other income (expenses):
Interest expense	(42,420		)	(804		)	(10		)	—			(43,234		)
Change in fair value of derivatives embedded within convertible debt	9,437			—			—			—			9,437
Equity in losses from real estate ventures	—			—			(47		)	—			(47		)
Equity in losses from investments	(296		)	(7		)	—			—			(303		)
Gain on sale of investment securities available for sale	96			—			—			—			96
Impairment of investment securities available for sale	(53		)	—			—			—			(53		)
Equity in earnings in consolidated subsidiaries	38,291			—			—			(38,291		)	—
Management fee income	2,767			—			—			(2,767		)	—
Other, net	1,069			435			317			—			1,821
Income before provision for income taxes	460			60,584			4,197			(38,291		)	26,950
Income tax benefit (expense)	18,804			(23,895		)	(1,381		)	—			(6,472		)
Net income	19,264			36,689			2,816			(38,291		)	20,478
Net income attributed to non-controlling interest	—			—			(1,214		)	—			(1,214		)
Net income attributed to Vector Group Ltd.	$	19,264		$	36,689		$	1,602		$	(38,291	)	$	19,264
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(1,214	)	$	—		$	(1,214	)
Comprehensive income attributed to Vector Group Ltd.	$	19,908		$	36,889		$	1,602		$	(38,491	)	$	19,908

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

				Nine Months Ended September 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	823,754		$	548,426		$	(358	)	$	1,371,822
Expenses:
Cost of sales	—			570,461			358,472			—			928,933
Operating, selling, administrative and general expenses	27,894			54,690			168,898			(358		)	251,124
Litigation settlement and judgment expense	—			5,791			—			—			5,791
Management fee expense	—			8,301			—			(8,301		)	—
Operating (loss) income	(27,894		)	184,511			21,056			8,301			185,974
Other income (expenses):
Interest expense	(133,650		)	(2,474		)	(22		)	—			(136,146		)
Change in fair value of derivatives embedded within convertible debt	26,142			—			—			—			26,142
Loss on extinguishment of debt	(34,110		)	—			—			—			(34,110		)
Equity in earnings from real estate ventures	—			—			26,357			—			26,357
Equity in losses from investments	(2,787		)	(36		)	—			—			(2,823		)
Gain on sale of investment securities available for sale	283			—			—			—			283
Impairment of investment securities available for sale	(179		)	—			—			—			(179		)
Equity in earnings in consolidated subsidiaries	136,570			—			—			(136,570		)	—
Management fee income	8,301			—			—			(8,301		)	—
Other, net	2,688			1,132			998			—			4,818
(Loss) income before provision for income taxes	(24,636		)	183,133			48,389			(136,570		)	70,316
Income tax benefit (expense)	66,484			(71,300		)	(17,701		)	—			(22,517		)
Net income	41,848			111,833			30,688			(136,570		)	47,799
Net income attributed to non-controlling interest	—			—			(5,951		)	—			(5,951		)
Net income attributed to Vector Group Ltd.	$	41,848		$	111,833		$	24,737		$	(136,570	)	$	41,848
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(5,951	)	$	—		$	(5,951	)
Comprehensive income attributed to Vector Group Ltd.	$	41,131		$	110,382		$	24,737		$	(135,119	)	$	41,131

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
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 losses from investments	(2,043		)	(65		)	—			—			(2,108		)
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 CASH FLOWS

				Nine Months Ended September 30, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	91,858		$	231,182		$	43,131		$	(159,728	)	$	206,443
Cash flows from investing activities:
Sale of investment securities	23,066			—			—			—			23,066
Maturities of investment securities	94,858			—			—			—			94,858
Purchase of investment securities	(120,362		)	—			—			—			(120,362		)
Proceeds from sale or liquidation of long-term investments	500			—			466			—			966
Purchase of long-term investments	(26,500		)	—			—			—			(26,500		)
Investments in real estate ventures	—			—			(20,830		)	—			(20,830		)
Acquisition of a business	—			—			(6,569		)	—			(6,569		)
Distributions from investments in real estate ventures	—			—			23,338			—			23,338
Increase in cash surrender value of life insurance policies	(371		)	(460		)	—			—			(831		)
Decrease (increase) in restricted assets	231			2,379			(6,151		)	—			(3,541		)
Issuance of notes receivable	—			—			(1,633		)	—			(1,633		)
Investments in subsidiaries	(20,245		)	—			—			20,245			—
Proceeds from sale of fixed assets	—			75			—			—			75
Capital expenditures	(31		)	(2,682		)	(12,545		)	—			(15,258		)
Pay downs of investment securities	2,153			—			—			—			2,153
Investments in real estate, net	—			—			(357		)	—			(357		)
Net cash used in investing activities	(46,701		)	(688		)	(24,281		)	20,245			(51,425		)
Cash flows from financing activities:
Proceeds from issuance of debt	850,000			—			21			—			850,021
Deferred financing costs	(19,200		)	—			—			—			(19,200		)
Repayments of debt	(835,000		)	(1,465		)	(135		)	—			(836,600		)
Borrowings under revolver	—			121,521			—			—			121,521
Repayments on revolver	—			(152,870		)	—			—			(152,870		)
Capital contributions received	—			550			19,695			(20,245		)	—
Intercompany dividends paid	—			(124,783		)	(34,945		)	159,728			—
Dividends and distributions on common stock	(158,425		)	—			—			—			(158,425		)
Distributions to non-controlling interest	—			—			(165		)	—			(165		)
Proceeds from issuance of Vector common stock	43,230			—			—			—			43,230
Net cash used in financing activities	(119,395		)	(157,047		)	(15,529		)	139,483			(152,488		)
Net (decrease) increase in cash and cash equivalents	(74,238		)	73,447			3,321			—			2,530
Cash and cash equivalents, beginning of period	279,815			14,798			98,917			—			393,530
Cash and cash equivalents, end of period	$	205,577		$	88,245		$	102,238		$	—		$	396,060

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		)
Investments in real estate, net	—			—			(130		)	—			(130		)
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
Repayments of notes receivable	—			—			4,410			—			4,410
Pay downs of investment securities	7,842			—			—			—			7,842
Proceeds from sale of fixed assets	—			32			13			—			45
Investments in subsidiaries	(1,103		)	—			—			1,103			—
Capital expenditures	(33		)	(5,619		)	(13,505		)	—			(19,157		)
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