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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Schedule of new accounting pronouncements



	Three Months Ended
	March 31, 2017
	As Previously Reported			Adoption of ASU 2017-07			As Revised
Operating, selling, administrative and general expenses	$	84,769		$	(490	)	$	84,279
Operating income	52,931			490			53,421
Other, net	1,770			(490		)	1,280
Loss before provision for income taxes	(7,007		)	—			(7,007		)



	Three Months Ended
	March 31, 2017
	As Previously Reported			Adoption of ASU 2016-18		As Revised
Decrease in restricted assets	$	1,156		$	948	$	2,104
Net cash used in investing activities	(22,365		)	948		(21,417		)
Net decrease in cash, cash equivalents and restricted cash	(36,843		)	948		(35,895		)
Cash, cash equivalents and restricted cash, beginning of period	393,530			5,078		398,608
Cash, cash equivalents and restricted cash, end of period	356,687			6,026		362,713

The following tables summarize the impacts of Topic 606 adoption on the Company’s condensed consolidated balance sheet as of January 1, 2018.




	As Previously Reported			Adjustments							As Revised
	December 31, 2017			Tobacco			Real Estate				January 1, 2018
ASSETS:
Accounts receivable - trade, net	$	29,481		$	—		$	4,514		⁽²⁾	$	33,995
Other current assets	21,121			2,525		⁽¹⁾	623			⁽³⁾	24,269
Total current assets	613,709			2,525			5,137				621,371
Other assets	36,786			—			3,740			⁽³⁾	40,526
Total assets	$	1,328,278		$	2,525		$	8,877			$	1,339,680
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY:
Other current liabilities	$	157,123		$	2,525	⁽¹⁾	$	7,806		⁽²⁾⁽⁴⁾	$	167,454
Total current liabilities	204,639			2,525			7,806				214,970
Deferred income taxes, net	58,801			—			(5,217		)	⁽⁵⁾	53,584
Other liabilities	22,380			—			27,983			⁽⁴⁾	50,363
Total liabilities	1,660,038			2,525			30,572				1,693,135
Accumulated deficit	(414,785		)	—			(13,780		)		(428,565		)
Total Vector Group Ltd. stockholders' deficiency	(413,919		)	—			(13,780		)	⁽⁶⁾	(427,699		)
Non-controlling interest	82,159			—			(7,915		)	⁽⁶⁾	74,244
Total stockholders' deficiency	(331,760		)	—			(21,695		)		(353,455		)
Total liabilities and stockholders' deficiency	$	1,328,278		$	2,525		$	8,877			$	1,339,680

⁽¹⁾

Adjustments to other current assets and other current liabilities for $2,525 relates to the presentation as a receivable the component of the allowance for sales returns representing the federal excise tax refunds expected for future returned product as a receivable in other current assets, which was previously presented as a reduction to the allowance for sales returns liability in other current liabilities.


⁽²⁾	Adjustments of $4,514 to accounts receivable and $3,139 to other current liabilities relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve-months.


⁽³⁾	Adjustments of $623 to other current assets and $3,740 to other assets represents the current and noncurrent portions, respectively, of deferred contract costs relating to direct fulfillment costs incurred in advance of the satisfaction of performance obligations for Development Marketing arrangements.


⁽⁴⁾	Adjustments of $4,667 to other current liabilities and $27,983 to other liabilities relate to the current and long term portions, respectively, of contract liabilities representing payments received from customers in advance of the performance obligations being satisfied under contracts for Real Estate development marketing.


⁽⁵⁾	Adjustment reflects the tax effect of the adoption of Topic 606 which was estimated to result in a decrease in net deferred income tax liability of $5,217 based on a recalculation of the income tax provision using the current annual effective tax rate of approximately 38.10% and the Company’s deferred rate of approximately 27.46%.


⁽⁶⁾	The allocation of the net impact of the adoption of Topic 606 between accumulated deficit and non-controlling interest is based on relative ownership interest of 70.59% and 29.41%, respectively.

Impacts on Financial Statements at March 31, 2018:

The following table compares the reported condensed consolidated balance sheet as of March 31,2018, to the pro-forma amounts had the previous guidance been in effect:



	As Reported			Pro forma as if the previous accounting guidance were in effect			Increase/(Decrease)

ASSETS:
Accounts receivable - trade, net	$	23,321		$	18,666		$	4,655		⁽¹⁾
Income taxes receivable, net	3,576			4,606			(1,030		)	⁽⁶⁾
Other current assets	28,320			25,208			3,112			⁽²⁾⁽³⁾
Total current assets	571,684			564,947			6,737
Other assets	46,749			42,270			4,479			⁽⁴⁾
Total assets	$	1,299,122		$	1,287,906		$	11,216
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:							—
Other current liabilities	$	131,407		$	120,731		$	10,676		^(1)(2)(4)
Total current liabilities	404,337			393,661			10,676
Deferred income taxes, net	48,421			54,070			(5,649		)	⁽⁵⁾
Other liabilities	53,285			22,578			30,707			⁽⁴⁾
Total liabilities	1,693,341			1,657,607			35,734
Stockholders' deficiency:							—
Accumulated deficit	(459,996		)	(444,048		)	(15,948		)	⁽⁶⁾
Total Vector Group Ltd. stockholders' deficiency	(464,916		)	(448,968		)	(15,948		)
Non-controlling interest	70,697			79,267			(8,570		)	⁽⁶⁾
Total stockholders' deficiency	(394,219		)	(369,701		)	(24,518		)
Total liabilities and stockholders' deficiency	$	1,299,122		$	1,287,906		$	11,216


⁽¹⁾	Adjustments of $4,655 to accounts receivable and $3,333 to other current liabilities relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve-months.


⁽²⁾	Adjustments to other current assets and other current liabilities for $2,390 relates to the presentation of the component of the allowance for sales returns representing the federal excise tax refunds expected for future returned product as a receivable in other current assets, which was previously presented as a reduction to the allowance for sales returns liability in other current liabilities.


⁽³⁾	Adjustments of $722 to other current assets and $4,479 to other assets represents the current and noncurrent portions, respectively, of deferred contract costs relating to direct fulfillment costs incurred in advance of the satisfaction of performance obligations for Development Marketing arrangements.


⁽⁴⁾	Adjustments of $4,953 to other current liabilities and $30,707 to other liabilities relate to the current and long term portions, respectively, of contract liabilities representing payments received from customers in advance of the performance obligations being satisfied under contracts for Real Estate development marketing.


⁽⁵⁾	Adjustments reflect the tax effect of the adoption of Topic 606 based on a recalculation of the income tax provision using the current annual effective tax rate of approximately 38.10% and the Company’s deferred rate approximately 27.46%.


⁽⁶⁾	The allocation of the net impact of the adoption of Topic 606 between accumulated deficit and non-controlling interest is based on relative ownership interest of 70.59% and 29.41%, respectively.

The following table compares the reported condensed consolidated statement of operations for the three months ended March 31, 2018, to the pro-forma amounts had the previous guidance been in effect:



	As Reported		Pro forma as if the previous accounting guidance were in effect		Increase/(Decrease)
Revenues:
Tobacco	$	267,116	$	267,489	$	(373	)
Real estate	161,850		163,805		(1,955		)
Total revenues	428,966		431,294		(2,328		)	⁽¹⁾

Expenses:
Cost of sales:
Tobacco	184,962		183,475		1,487
Real estate	109,313		108,674		639
Total cost of sales	294,275		292,149		2,126			⁽²⁾

Operating, selling, administrative and general expenses	89,076		91,305		(2,229		)	⁽³⁾
Operating income	48,084		50,309		(2,225		)
Other income (expenses):
Income before provision for income taxes	5,612		7,837		(2,225		)
Income tax expense	1,948		2,546		(598		)	⁽⁴⁾

Net income	3,664		5,291		(1,627		)

Net loss attributed to non-controlling interest	3,547		2,892		655

Net income attributed to Vector Group Ltd.	$	7,211	$	8,183	$	(972	)

Per basic common share:

Net income applicable to common share attributed to Vector Group Ltd.	$	0.04	$	0.05

Per diluted common share:

Net income applicable to common share attributed to Vector Group Ltd.	$	0.04	$	0.05

⁽¹⁾

The impact to revenue for the three months ended March 31, 2018 was a decrease of $2,328 primarily due to a $2,751 decrease to revenue from the Real Estate Development Marketing business representing advance payments for services and commissions that are deferred since they do not constitute satisfied performance obligations under Topic 606, and which would have been previously recognized as revenue upon receipt.


⁽²⁾	The impact to cost of sales was an increase of $2,126 primarily related to the reclassification of $1,352 of Tobacco shipping and handling costs from operating, selling, administrative and general expenses to costs of sales as a result of adopting Topic 606.


⁽³⁾	The impact to operating, selling, administrative and general expenses was a decrease of $2,229 primarily due to:


•	The reclassification of $1,352 Tobacco shipping and handling costs to cost of sales,


•	The deferral of $1,212 of direct costs in the Real Estate Development Marketing business related to performance obligations not satisfied as discussed above, offset by the amortization of previously deferred contract costs of $374.

⁽⁴⁾

The net impact of the adoption of Topic 606 was estimated to result in a decrease in income taxes of $598 based on a recalculation of the income tax provision using the current annual effective tax rate of approximately 38.10% and the Company’s deferred rate approximately 27.46%.

Disaggregation of Revenue

In the following table, revenue is disaggregated by major product line for the Tobacco segment:



	Three Months Ended
	March 31, 2018		March 31, 2017
Tobacco Segment Revenues:
Core Discount Brands - Pyramid, Grand Prix, Liggett Select, Eve and EAGLE 20’s	$	241,531	$	227,572
Other Brands	25,585		29,882
Total tobacco revenues	$	267,116	$	257,454

In the following table, revenue is disaggregated by major services line and primary geographical market for the Real Estate segment:



	Three Months Ended March 31, 2018
	Total		New York City		Northeast		Southeast		West
Real Estate Segment Revenues:
Commission and other brokerage income	$	138,896	$	60,408	$	32,678	$	24,398	$	21,412
Development marketing	11,220		10,610		123		293		194
Property management income	8,338		8,138		200		—		—
Title fees	989		—		989		—		—
Total Douglas Elliman Realty revenue	159,443		79,156		33,990		24,691		21,606
Other real estate revenues	2,407		—		—		—		2,407
Total real estate revenues	$	161,850	$	79,156	$	33,990	$	24,691	$	24,013



	Three Months Ended March 31, 2017
	Total		New York City		Northeast		Southeast		West
Real Estate Segment Revenues:
Commission and other brokerage income	$	134,504	$	80,819	$	23,630	$	22,928	$	7,127
Development marketing	12,389		9,014		79		3,095		201
Property management income	7,783		7,613		170		—		—
Title fees	861		—		861		—		—
Total Douglas Elliman Realty revenue	155,537		97,446		24,740		26,023		7,328
Other real estate revenues	2,217		—		—		—		2,217
Total real estate revenues	$	157,754	$	97,446	$	24,740	$	26,023	$	9,545

Contract Balances

The following table provides information about receivables, contracts assets, and contract liabilities from contracts with customers:




	March 31, 2018		At Adoption

Receivables, which are included in accounts receivable, net	$	4,655	$	4,514
Contract costs, net, which are included in other current assets	722		623
Payables, which are included in other current liabilities	3,333		3,139
Contract liabilities, which are included in other current liabilities	4,953		4,667
Contract costs, net, which are included in other assets	4,479		3,740
Contract liabilities, which are included in other liabilities	30,707		27,983